Disney: Hulu, Other Streamers' Ad Revenue Gaining On ABC's, 'Mass Penetration' Push On For ESPN+

Ad revenue from Disney’s ad-supported online D2C businesses, including Hulu, ESPN+ and ABC.com, increased 47% to $882 million last quarter, while ABC’s rose 5%, to $984 million.

At that pace, OTT and other online ad revenues will soon surpass the network’s, points out Bloomberg, which cited stats from a Disney filing.

During this week’s Morgan Stanley online conference on tech and media, Disney CEO Bob Chapek touted Hulu’s success, in particular.

“The secret weapon with Hulu is obviously the rapidly growing, robust advertising business,” he said. “The combination of great content, being part of the Disney bundle [Disney+, Hulu, ESPN+], and the very impressive growth in advertising is, I think, going to make that a winner for us.”

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eMarketer estimates that Hulu’s ad revenue will rise about 30% this year, to reach up to $3 billion — while Disney’s broadcast division generated $3.26 billion in advertising in fiscal 2020, notes Bloomberg.

Disney is focused on driving advertising across the platforms by enabling self-serve, one-stop shopping of its enhanced data-enabled programmatic and first-party data offerings – with the company forecasting that programmatic will generate up to half of the company’s addressable and linear TV revenue by 2024.

Hulu, which now has 39 million users, and charges $6 per month for its with-advertising tier and $12 per month for the no-ads tier (outside the Disney+ bundle and other promotional offers) will of course also contribute revenue from that D2C source.

During a Q&A, Chapek also commented on why Disney has significantly increased its growth guidance for ESPN+.

Calling the sports streaming service “absolutely critical to us going forward,” he said Disney will be pushing for mass-market penetration — “even broader appeal” to sports fans in the U.S. and globally.

“Our guidance of 20 million to 30 million households is, once again, a function of the uptake of the incredibly successful [Disney+] streaming bundle,” he said. He noted that the guidance was based strictly on a status quo, current trends basis, without taking into account “any transformative changes, either on the upside or downside—so we’re really pleased.”

Disney is “steering as many rights as possible toward ESPN+,” Chapek added. “In fact, we won't contemplate rights deals going forward that don't envision ESPN+ being a major player in the use of those rights.” The company will require that flexibility for ESPN+ because “as the consumer flexes once again, we want to be able to flex with him,” he said.

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