Disney’s Bundling Strategy Will Be Key to Long-Term Streaming Success

Viewers might be tiring of “Star Wars” and Marvel shows, but that evidently hasn’t damaged Disney’s streaming prospects too badly.

The Mouse House’s triumphant fiscal Q4 earnings report last week was that of a company newly confident in its future in the SVOD business, not only flaunting solid subscriber gains and growing profits but boldly projecting over $1 billion in operating income for direct-to-consumer in 2025 and a 10% operating margin for the segment (excluding sports and Hulu + Live TV) in 2026.

Why the newfound swagger? It’s easy to tout Disney’s IP stable and powerhouse brand to explain its success, and the addition of blockbuster film titles such as “Inside Out 2” to Disney+ no doubt helped fuel its robust subscriber growth in the past quarter.

But there’s another factor at work, at least in the domestic market, that may have even greater significance for the long-term future of Disney+: its transformation into a streaming super-app.

Disney has long benefited from its ability to package its SVOD offerings as a branded “Disney Bundle,” consisting of either the “Duo” of Disney+ and Hulu or the “Trio,” with ESPN+ added in as well.

But it’s become more and more evident over time that the company’s move to consolidate its services, by integrating Hulu content into the Disney+ app earlier this year, was a transformative step for its streaming business.

Domestic “Duo” subscriptions have consistently increased since the Hulu-Disney+ integration (and its corresponding marketing push) launched in late March and expanded from just 2.3 million to 7.4 million in the space of a year. Meanwhile, since March, Disney’s standalone streaming subscriptions have dipped, indicating many Disney+ and/or Hulu users have been effectively converted to the bundle.

Consolidating services into a single app, therefore, is clearly an effective strategy for growing bundle subscribers. Content discovery pain points aside, consumers want (or think they want) as much content as possible in one place — a major factor behind Netflix’s continued popularity.

If further proof is needed, Disney provided it on last week’s earnings call, announcing that ESPN content would be added to the Disney+ app for the first time. Trio subscribers will have “full access to all of the ESPN+ sports content they love while inside Disney+,” CEO Bob Iger and CFO Hugh Johnston explained in a statement, furthering the consolidation of the Disney streaming experience.

In short, Disney is working to shore up its position as a four-quadrant, all-things-to-all-people streaming provider that can truly rival Netflix. The company’s increasingly bundled approach to streaming is likely to help boost user engagement, which, in turn, will help reduce subscriber churn.

Indeed, per Luminate Streaming Viewership data, viewing time for Hulu originals year-to-date in 2024 is already up 7% relative to all of 2023 — 53.6 billion minutes versus 50.1 billion minutes — likely due in large part to the Disney+ integration.

And keeping viewers engaged through one platform rather than requiring them to bounce between multiple apps to find something to watch eliminates a major pain point in the streaming experience, one in which a user might easily turn to a rival service instead.

The move to consolidate services into “hard bundles,” as single-app SVOD packages are known, has accordingly been a persistent trend in the space, leading to, for instance, the relaunch of HBO Max as the broadly targeted Max.

Disney’s unique advantage lies in combining this approach with the clear identity and appeal of its storied brand and IP, avoiding the pitfall of becoming an “undifferentiated” platform while serving a broad audience. In the current phase of the streaming era, packaging content is nearly as vital as the content itself, and Iger & Co. are well on the way to mastering both.