This is how Disney is going to compete against Netflix

Less than a year into its launch, ESPN+, Disney’s sports streaming service, has racked up 2 million subscribers, which is double what the app had just five months ago. The news represents a small victory for the service, but a much larger one for Disney, which is putting its full weight behind its new direct-to-consumer services, which also includes the launch of Disney+, a family-oriented app due out by the end of this year. Disney has by far been the most aggressive of the major entertainment conglomerates to embrace streaming, and the launches of its new apps are being closely watched within the media and entertainment spaces.  

During Disney’s first-quarter earnings call on Tuesday, chairman and CEO Bob Iger did not belabor the importance of Disney’s OTT efforts, saying, “This is a bet on the future of this business.”

The rapid growth of ESPN+ shows that that bet is already starting to pay off. Iger said that the platform benefited greatly from the first UFC Fight Night that streamed, leading nearly 600,000 fans to sign up for ESPN+. He added that more combat content will be added to the service as a means of continuing growth. 

More broadly, Disney is looking at ESPN+ as a blueprint for the launch of Disney+, which will house content from Disney, Marvel, Pixar, NatGeo, and Star Wars. He said that the successful rollout of ESPN+ on the BAMTech platform–Disney is a majority owner of the streaming technology company, which is powering all of its OTT services–proved that the company is “capable of handling not only scale and live streams simultaneously, but a substantial number of transactions in a short time.” Before the UFC fight, he said that BAMTech was processing just under 15,000 transactions a minute. 

He also said that ESPN’s networks and digital channels were proving to be effective marketing platforms to help ESPN+ grow, and that model will be applied to Disney+, using the Disney properties, from ABC to Freeform to Disney Channel. 

“If you consider all that–the fact that we have a technology platform that’s working, a user interface that’s working and can handle sign-ups en masse, and the use of present platforms” to market the app, “I think it all adds to a very, very positive picture ahead of the launch of the Disney+ service.” 

Iger also touched on Hulu during the call, saying that the goal was to make the app profitable once Disney becomes its majority owner, which will happen when Disney’s acquisition of 21st Century Fox receives full regulatory approval. He also said that at some point Disney would look more aggressively at launching Hulu overseas, and that it will become a platform for original content from FX, which will also come under the Disney umbrella in the Fox deal. 

“We’ve been extremely impressed with FX and what it has managed to do with its programming and its relationship with the creative community,” Iger said. “We foresee FX developing and producing projects for Hulu in particular,” seeing as its more adult-focused content is not appropriate for Disney+. 

Disney reported earnings per share of $1.84, a 3% drop from the year prior. It also reported revenue of $15.3 billion, which was more or less flat year-over-year. The results were better than Wall Street had anticipated due to higher broadcast revenues and growth at parks, despite a dip in theatrical revenues.