Former Disney chief executive Bob Iger has told an audience of Australian investors there is still room for growth in video streaming, despite the punishment handed out to his former company and rival Netflix on Wall Street this year.
Iger, who led the House of Mouse for 15 years until 2021, famously pushed the $US175 billion behemoth into online streaming, a market pioneered and previously dominated by Netflix. And despite the move costing the company billions of dollars, it was initially applauded by investors. “We were being disrupted by others, so why not disrupt ourselves?” Iger said at the Macquarie Technology Summit on Tuesday.
Former Disney chief Bob Iger.Credit: AP
“We had to tell Wall Street by the way, basically, don’t worry, we’re going to reduce our profitability by a couple of billion dollars, but this is what we’re doing. We were actually surprised pleasantly that they applauded the move. They believed that if anyone had the ability to do it, it was us.”
Since then, Apple, HBO and a host of other US entertainment giants have launched streaming services, many of which are also available in Australia.
This year, concerns about market saturation, along with rising inflation and interest rates, have prompted the market to reassess the value of streaming firms. Disney shares are down 60 per cent this year while Netflix has fallen almost 70 per cent.
Iger insisted the streaming market was not oversaturated, arguing it had provided consumers with more choice in how they watched and paid for TV shows and movies. “We’ve seen tremendous growth very fast. We’re now seeing some of that growth, basically slowing a bit, but some of the issues that some of these businesses face are rising to the surface… but I think [streaming] is here to stay.”
Iger said the move to streaming had been expensive because Disney had to build a new technology platform and cancel lucrative licensing agreements with other streaming firms, which eventually included Stan in Australia. Stan is owned by Nine, which also owns The Sydney Morning Herald and The Age. Nine shares have fallen by about 30 per cent this year on the ASX.
The Macquarie summit took place after a sharp fall in technology stocks this year, as rising interest rates have prompted investors to cut their valuations of “growth” businesses, especially those that are not yet profitable.
Macquarie chief executive Shemara Wikramanayake acknowledged this year’s correction in tech valuations after the boom of 2021, but said the bank remained optimistic towards technology’s longer-term potential.
“Whilst the enthusiasm and specific circumstances that drove valuations to record heights were always set to lose some momentum, technology’s long term role in addressing societal challenges is undiminished,” Wikramanayake said.
“There’s little doubt that the digitisation of the global economy will continue, and based on previous experience, that the current period of disruption will give rise to new ideas and new businesses that underpin the next growth phase for the sector.”
with Clancy Yeates