Following this month’s Walt Disney Companies quarterly results, Wall Street, Shareholders and analysts started to raise serious questions about the growth of Disney+, as in the past quarter, they had only managed to add 2 million subscribers.

This was down to several reasons, including many subscribers in India leaving due to the cricket season-ending, but one of the biggest issues that Disney+ has, is that it lacks content to keep older subscribers happy.

Following a disastrous stock market drop, there were apparently heated arguments between Disney executives over the future of Disney+, with many trying to encourage Disney to add more mature content.


With Bob Iger set to leave the Walt Disney Company within the next few months, Bob Chapek will then have much more control over what happens next.  Bob Iger has always wanted Disney+ to be more focused on its core 5 brands, but that all changed earlier this year when Disney+ added content for adults and teenagers worldwide when it introduced the general entertainment brand, Star, was added.  This brought a wide range of shows and films into the streaming service, including “Deadpool”, “Grey’s Anatomy”, “Aliens”, and much more.

The introduction of the Star brand into Disney+ resulted in a reduction in the number of people unsubscribing and also increased engagement/use of Disney+.  This data could help see a change to Disney+ in the US as it’s already proven to be working around the world including across Canada, Europe and Asia.


Some of the executives believe that Disney+ in the United States shouldn’t add too much adult-tailored content as it would dilute or muddy a pristine crown jewel.  (Which is strange since they’ve already done this in every other country except for the US and in Latin America).

In the United States, things are much complicated because Disney has multiple streaming platforms, Disney+, Hotstar, Hulu and ESPN+.  It has already announced its closing Hotstar later this month, merging its entertainment offerings in with Hulu and the sports content in with ESPN+. Just this week, Disney announced the Hulu Live TV package will now include Disney+ and ESPN+ as standard.

According to Puck News, Disney CEO Bob Chapek is very much aware that Disney+ needs more content to continue to grow its audience. According to a number of well-connected Hollywood executives asked, Hulu is the way they believe will make Disney+ even bigger in the United States.


Currently, Disney hasn’t been investing heavily into Hulu, because growing the streaming service is counterproductive because Comcast still owns 33% of the company.  The two companies signed a contract that would mean in 2024, Disney can force Comcast to sell its share, and also Comcast can force Disney to buy out its share. Hulu will be independently valued, and so if Disney increases the value of Hulu too much, it’s going to cost it more in the long run.  This is one of the major reasons why Disney didn’t launch Hulu outside the US, instead incorporating Star into Disney+ and launching Star+ in Latin America.  As growing, Hulu would have done nothing but handing more money to Comcast.

Once Disney has purchased Comcast’s state in Hulu, Bob Chapek could then be in a position to merge Hulu and Disney+ together into a single service, rather than a bundle.  This would dramatically increase the Disney+ subscriber numbers to hit Disney’s target of 230-260 million subscribers by 2024.

A source who is familiar with Disney’s roadmap has said that Bob Chapek is planning on increasing the budget on creating original programming for Hulu, from $2-$3 billion a year to $7 billion a year, which would be slightly below budget Disney+ has to invest in original programming by 2024.  Hulu will need to increase its original programming as lots of licensing contracts are due to expire over the next few years, removing many shows and movies from the platform.

Any money spent on Hulu Originals would also benefit Disney+ internationally, as the majority of Hulu Originals become Star Originals around the world like the upcoming 20th Century Studios films “Rosaline”,Prey” and “The Princess“.


It’s also important to take into consideration, that movies and shows take a lot of time to develop and turning the production up on content for Hulu/Star will take some time.  It’s not going to happen overnight.

There is a lot of attention on Disney+ right now as while some subscribers are happy with the “family-friendly” core of Disney+. There is a lot of other subscribers unhappy with how little content there is for teenagers and adults, other than the Marvel and Star Wars content.

Could we see a merger of Hulu and Disney+ in the future once Comcast’s stake is brought out?  Possibly.  Bob Chapek has previously said the current bundle isn’t ideal, but there are some issues that will need to be addressed, such as keeping the Disney branding strong.   There are also other issues such as incorporating ESPN+ and potential advertising.

Will investors be happy with Disney+ maintaining its current direction?  Hulu continues to be a massive stumbling block for Disney. Other streaming services like Netflix, Amazon Prime, HBO Max, Peacock and Paramount+ are all offering content for everyone in one app, making them much more easier to promote and look to offer more value.  Disney’s streaming platforms are spreading out its content and also subscribers among multiple platforms, which isn’t ideal.


A merger between Disney+ and Hulu could be a couple of years away, unless Disney can offer Comcast enough money to sell its share of Hulu earlier than planned.  Only recently, Comcast said it was in no rush to sell its stake in Hulu, which is no doubt a way to encourage Disney to offer more money to get the deal sorted.

 

What do you think of the idea of Hulu and Disney+ merging?

 











Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

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3 Comments

  1. David November 21, 2021

    Personally I think the content on Disney plus is fine. I don't need to have to pay more for something I don't want. I don't want hulu. I'd get rid of Netflix if the older kids didn't watch it. Most of it is just crap I don't want to watch. I don't exactly know what mature stuff they feel is needed since stat wars is mature enough to me.

  2. Matthew Day November 22, 2021

    Disney Plus had a down quarter due to the release schedule. There was no new live action Star Wars or MCU show debuting. What if came out but it was both animated and doesn't appear to be directly tied to other MCU properties. This next quarter with Hawkeye and then the Book of Boba will pick subscribers increases back up. Although to date the MCU shows overall have been disappointing when compared to the movies. Even Black Widow was kinda blah. Shang Chi had good parts but was missing something too. So far the Mandalorian had carried Disney Plus. Until the MCU stuff matches its quality I have my hope on Star Wars for the service. Based on Boba's reception in season 2 I have high hopes for his show. Same for Ashoka.

  3. nerdrage November 22, 2021

    As a Disney investor, I recognized that the problem causing subscriber growth to stall and the stock price to drop is due to that dratted Comcast deal, which is preventing Disney+ from making the obvious moves. Nice to know Chapek sees what needs to be done and will do it asap. He can't wait for 2024. Streaming is measured in dog years. Need to get a Hulu (or Star) tab for grownup content on Disney+ in America fast to stop the subscriber defections. I bet American cancellations are offsetting overseas growth and causing the overall subscriber growth problem.