Disney CEO Bob Iger Acknowledges Netflix’s Impact in Surprising Revelation- Here’s What Investors Should Know.

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Disney CEO Bob Iger Acknowledges Netflix’s Impact in Surprising Revelation- Here’s What Investors Should Know.

In an interview earlier this month, CEO Bob Iger spoke at length about the situation at Walt Disney (NYSE:DIS). On the subject of streaming, he noted that when Disney+ launched in 2019, the priority was to increase viewership at scale. The importance of this cannot be overstated as Disney+ signed over 10 million subscribers in the first 24 hours, quickly reaching 100 million.

Disney CEO Bob Iger Acknowledges Netflix’s Impact in Surprising Revelation- Here’s What Investors Should Know.

Image source: Disney.

That said, Iger admitted that the technology was lacking in several respects. The platform was not designed to control customer acquisition and retention costs or to increase viewer engagement, and it was not conducive to controlling marketing spend. Disney is currently working to correct these shortcomings, and Iger makes this stunning admission: “The gold standard exists Netflix.” He added:

We must be at their level in terms of technological capacity. And one of the reasons their margins are much higher than ours is because they have this technology. Our marketing expenses are therefore significantly higher. Our churn rates are higher than they should be.

From afar

In fairness to Iger, Netflix was 13 years ahead of the curve – and its results help illustrate Iger’s point. Excluding the impact of foreign currencies, the streaming pioneer has generated operating margins of around 20% or more in each of the past four years. Additionally, after years of spending cash to fund expansion, Netflix’s free cash flow has exploded, reaching $6.9 billion in 2023.

There is good news. Disney’s combined streaming business is on track to turn a profit by the end of fiscal 2024. This is partly the result of aggressive cost cutting, with Disney on track to exceed its initial goal of $7.5 billion in cost savings. Furthermore, the sports streaming deal with Discovery Warner Bros. And Fox could unlock additional profit potential for ESPN.

These factors, along with improvements to its streaming infrastructure and Iger’s track record of success, show why Disney will be the mouse that roared. streaming.

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Danny Vena holds positions in Netflix and Walt Disney. The Motley Fool holds positions and recommends Netflix, Walt Disney and Warner Bros. Discovery. The Motley Fool has a disclosure policy.

Disney CEO Bob Iger just made a surprising admission about Netflix. Here’s what investors need to know. was originally published by The Motley Fool

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