In the past few months, we’ve seen Disney making lots of changes to Disney+, to provide more general entertainment content, with the addition of popular ABC series like “Black-ish” and ESPN documentaries, including the recent Tom Brady series, “Man In The Arena”. Disney’s announced that a cheaper ad-tier version is coming later this year. We’ve seen the parental controls in the United States be upgraded to match the international version, resulting in mature shows like “Daredevil” added. And only last week, Disney announced that “Dancing With The Stars” will move from ABC to Disney+ and will be the first live weekly show on the platform.
These moves are being done to establish Disney+ as the main entertainment hub for the Walt Disney Company. But where does this leave Hulu?
Disney’s streaming strategy in the United States was all about the bundle. It had the sports on ESPN+, Disney+ provided the Disney content, and Hulu was everything deemed more mature. Former Disney CEO Bob Iger wanted Disney+ to remain the family-friendly branding, but the streaming world was changing, especially with more competition coming from Peacock, Paramount+ and HBO Max.
Internationally, the addition of the general entertainment brand, Star, had transformed Disney+ into one of the popular streaming platforms, with major shows and films, sitting alongside the traditional Disney content. Disney has the statistics to show how adding more general entertainment into Disney+ has worked. When Disney+ launches in a further 40 countries later this year, they all include Star. Disney has already shown that they don’t need Hulu in the rest of the world!
There is still one major problem that Disney has with Hulu. Comcast still owns 33%, and they’ve got a deal in place, which means Disney can buy out Comcast’s stake in 2024, unless they come to an agreement before.
Recently, analyst Richard Greenfield from Lightshed has suggested an entirely different way to fix the problem. Comcast buys Hulu!
The more we think about it, why not sell Hulu to Comcast versus spending $15-$20 billion to acquire the 1/3 they do not own? Comcast knows Peacock is subscale and would love to buy Hulu. For Disney, Hulu is US-only and the content Disney owns could easily be repurposed to Disney+ in a more adult genre/vertical as Disney already does overseas with the Star tab. Disney would also de-lever rapidly with $30-$40 billion of extra cash from selling Hulu, enabling a dramatic increase in their investment in programming for Disney+.
Relaunching Disney+ in the United States with some new hubs for ABC, FX and 20th Century Studios wouldn’t be much of a stretch, since they’ve already got the Star hub operating on Disney+ and have previously added code to add more hubs within the app.
With all of these changes to Disney+, it looks like many of the reasons it had to be kept separate from Hulu are slowly disappearing.
And it would undoubtedly make promoting new shows and films much easier for both Disney and its consumer. Below is a recent tweet about a new original series, “The Kardashians”, highlighting the problem!
Hulu was created and operated by multiple studios, including Disney, Fox, NBC and Time Warner, in a time when they were competing with Netflix, but were still focused on traditional linear television networks.
Each studio has its own streaming platform, and we are going to see more consolidation within the market in the coming years ahead, such as HBO Max and Discovery+. Hulu has lots of subscribers, it’s still got plenty of value for Disney and Comcast, but it’s pretty apparent that its future is murky.
The former Hulu president is already running peacock, and she’s been hiring lots of Hulu talent. Plus with Peacock being one of the least subscribed major studio platforms, it would benefit from merging with Hulu more so than Disney+. Since Disney could flip its content releases from FX, 20th Century Studios and ABC to Disney+ very quickly, since it’s already happening outside the US.
Both Comcast and Disney need to make a decision about the future of Hulu before 2024. Otherwise, in a couple of years, Hulu will be just a shell of a streaming service, as its content is slowly moved off to other platforms.
Right now, Hulu just doesn’t fit.
Do you think Hulu should merge into Disney+ or Peacock?