Disney's Streaming Efforts Are CEO Iger's 'No. 1' Priority

Expectations were high going into Walt Disney's (NYSE:DIS) fiscal first quarter earnings report. Even as investors awaited news on the company's financial results, much of the conversation focused on questions about the pending release of the Disney+ streaming service later this year and the anticipated closing of the Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA) acquisition, which is pending final regulatory approval.

As for the earnings report, Disney started 2019 in fine fashion, reporting revenue of $15.30 billion, virtually unchanged from the prior-year quarter, and easily topping analysts' consensus estimates of $15.18 billion. Profitability also shined, with adjusted earnings per share of $1.84, down 3% year over year, but also surpassing expectations of $1.55.

But on the conference call to discuss the results, the conversation again turned to the media conglomerate's plans for streaming. And more information did come out. Specifically, investors got some tidbits about the launch of Disney+ -- the direct-to-consumer (DTC) service set to debut later this year -- soaring subscriptions at ESPN+, and, more broadly, discussion of the company's streaming ambitions in general.

'No. 1 priority'

Disney CEO Bob Iger acknowledged the high interest in streaming early on the call, saying "DTC remains our No. 1 priority." He went on to point out that the company's recent reorganization was designed to support Disney's DTC efforts, while providing greater transparency regarding the company's investments and progress in the space.

ESPN's recent agreement with UFC (Ultimate Fighting Championship) is bearing fruit, as 600,000 fans signed up for ESPN+ (the company's sports streaming service) in order to watch the bouts. And ESPN+ is seeing rapid consumer adoption, now boasting more than 2 million paid subscriptions. That doubled its customer base in just five months. The service, which is built on BAMTech's platform, "has proved to be remarkably stable during peak live streaming consumption," according to Iger. To illustrate this, Iger pointed out that the service was able to handle more than half a million people signing up for it during a single 24-hour period with no issues. The same technology will underpin Disney+ when the service launches later this year.

Ready to take on the champ

In a clear shot at streaming competitor Netflix (NASDAQ:NFLX), Iger said, "When presented with an overabundance of choice, consumers look to brands they know ... to find what they actually want." He pointed out that some viewers have complained that, with so many new shows, it's difficult to find the programs they like on Netflix. With Disney's numerous iconic brands and franchises, Iger said he believes the company's new service will "break through the competitive clutter and connect with consumers."

When the acquisition of Fox is complete, Disney's ownership stake in Hulu will jump from 30% to 60%. As the deal nears completion, Disney plans to quickly ramp up content from its various studios to support the company's multiple streaming services -- including Hulu.

Disney will host an investor day on April 11, and will provide a demonstration of the Disney+ platform and showcase some of the original content the company is developing for the service. Disney also plans to provide "detailed insight" into the overall DTC business.

OK, not just streaming

Iger announced that Disney was the proud recipient of 17 Academy Award nominations, with seven going to last year's blockbuster hit Black Panther, including an historic nomination for Best Picture. He went on to say that between Disney and 21st Century Fox, the two studios received 37 nominations, which he said illustrates "the creative potential of the combined companies."

Additionally, Disney is particularly enthusiastic about next month's release of Captain Marvel, which CFO Christine McCarthy noted was "Our first female-led superhero film."

This is certainly a year of transition for Disney, as the company prepares to integrate Fox's television and movie studios, while launching one streaming service, and gaining operational control of another. If the early success of ESPN+ is any indication, these services will ultimately be successful, and investors will soon be streaming not only Disney's DTC services -- but profits as well.

This article originally appeared in the Motley Fool.

Danny Vena owns shares of Netflix and Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.