Inside Disney’s mission to keep viewers glued to their screens

The entertainment giant is developing a host of new features aimed at lengthening the amount of time subscribers spend viewing its shows and movies. The goal is to mitigate customer defections and generate more revenue from advertising sales.

A metric known as “hours per subscriber"—a measure of user engagement—has taken on increased importance at Disney in recent months, current and former streaming employees say. Netflix, famous for enabling binge-watching with batch releases of episodes, has also given priority to improving user engagement and return visits in recent years.

New features in the works at Disney include a more-personalized algorithm to power content recommendations, customized promotional art for new shows and movies based on subscriber’s tastes and usage history, and emails sent to viewers who stop watching in the middle of a series reminding them to finish, according to people familiar with the matter. Some of these features could roll out in the next six months. The company is developing pop-up live channels aimed at entertaining viewers who don’t have the time or energy to scroll through viewing options, people familiar with the matter said. Some ideas that have been discussed are channels that play through the entire Marvel Cinematic Universe or popular series like “The Simpsons" from start to finish. Such channels could be sponsored or have ads or not. The Information earlier reported on plans for live channels.

Increasing engagement and reducing subscriber cancellations are key to helping Disney reach its goal of making its streaming business profitable in the final quarter of the fiscal year that ends in September, as well as bolstering the long-term financial health of the streaming business, both major strategic priorities for Chief Executive Bob Iger.

The heavy technical lift underscores the manpower and investment needed to build streaming services from scratch. Disney and other entertainment companies, like Paramount Global, that are pivoting from legacy cable businesses to streaming have learned that user experience and a strong content lineup go hand in hand when it comes to attracting and retaining subscribers.

Disney’s streaming technology team comprises about 8,000 employees—including those who also work for the company’s traditional TV networks, in advertising tech and for other apps. It has spent recent months focused on the effort to shift to a more Netflix-like streaming experience, according to people familiar with the matter.

Iger has been attending biweekly streaming strategy meetings since he returned as CEO in late 2022, according to people familiar with the matter, including planning sessions with top leadership in the entertainment division’s technology, marketing and sales units. In a May earnings call he said Netflix is the “gold standard" in streaming, and that Disney is developing technology to help it catch up to its rival and boost the streaming business’s bottom line.

Disney has nearly 230 million streaming customers globally across its services, compared with Netflix’s 270 million.

Disney attracts more U.S. TV viewing time than any other entertainment company when you include both its traditional TV channels and streaming platforms, according to Nielsen. But Disney trails Netflix when comparing streaming viewership alone.

Engaging viewers

The company has learned that it needs to better integrate its offerings to extend viewership. Since adding a Hulu tile to Disney+, Disney has begun mixing in Hulu recommendations on the Disney+ home screen.

Executives are studying the viewing behavior of subscribers who pay for a bundle of Disney’s streaming services such as Disney+ and Hulu or a cluster that includes those two services and ESPN+. It has started tagging them, for example, as “Disney+ dominant" or “Hulu dominant" based on their usage to understand what keeps them engaged.

Among the findings thus far: “Disney+-dominant" viewers—those who primarily use their subscriptions to watch Disney+ content, rather than Hulu or ESPN+—are watching far more Hulu content within the Disney+ app since the tile was added, people familiar with the matter said. Ensuring that a steady stream of fresh Hulu recommendations are targeted at those customers is key to further increasing their engagement.

Disney also plans to similarly study customers brought in by a new bundle with Warner Bros. Discovery’s Max to better understand how those subscribers differ from those who pay for the Disney bundle, according to people familiar with the matter.

More Netflix-like model

Some of the changes under way at Disney’s streaming services are meant to transition the company away from largely relying on human-curated content recommendations and toward a more Netflix-like model that relies on user data to drive Disney content suggestion algorithms, people familiar with the matter said.Iger has said in meetings and in earnings calls that he wants the algorithm to do a better job of recommending shows and movies from its vast library of Hulu and Disney content. In May, Iger told investors that Disney had a “laser focus on driving engagement" to lower subscriber churn over time, and that its marketing costs were too high because its personalization technology needed to improve.

Disney employees who manually curate content typically drag-and-drop suggested titles based on the theme of the promotion into rows that subscribers see near the top of their screens when they log in.Curators build rows based on coming seasonal themes—such as Halloween and June’s Pride month—or on the schedule of hot new releases, such as new seasons of its FX Network’s critically acclaimed restaurant drama “The Bear" on Hulu.

Disney, a franchise powerhouse, relied on human-curated recommendations in the past because streaming executives initially believed that subscribers are more likely to show a clear preference for one or more of the company’s themed content portfolios—like Marvel, Star Wars, Pixar or National Geographic—and click on them without prompting.

Write to Robbie Whelan at robbie.whelan@wsj.com