No Disney Does Not Have A Hulu Problem
Recently, CNBC’s Alex Sherman posted a story saying that Hulu is facing an existential crisis because of Disney’s impending purchase of Comcast’s 33 percent share of the company. An existential crisis. Really sir? A growing service that allows for diverse programming and also happens to be the most popular cable tv alternative service. Yeah that is gonna sink like a stone for Disney. It might even be worse for Disney than ESPN. (Note the sarcasm)
I think Disney outfoxed all of its partners with Hulu. In fact, if I found out that Disney planted someone at Comcast to encourage it to launch Peacock just to get them out of the way at Hulu I would not be at all surprised. Not that Peacock is a problem for Comcast. But because Hulu is such a big potential winner for Disney.
How is Hulu such a strength for Disney?
Ok, so Peacock/Comcast is going to pull its top programs from Hulu in the future. But guess what. If it does not lead to subscription increases or at least usage increases at Peacock, Comcast will probably be calling on Hulu when it’s time to figure out rights again. Because Hulu will pay Comcast for the rights to shows. On the other hand, having a show on a homegrown service depends on people subscribing to the service or watching commercials in order for it to make money. The homegrown approach worked for Disney+ because millions of people wanted access to the content Disney owns and the fandoms behind Marvel and Star Wars wanted access to the related shows.
Does Peacock have that Cachet? Will people be clamoring for This Is Us five years from now? What about Saved By the Bell? Saturday Night Live is a big draw for Hulu during the fall. It is super buzz-worthy, especially during election season. But will people cancel Hulu if it does not have Saturday Night Live? I guess it’s possible. I don’t know anybody who has Hulu it because of it. Take a look at the content from NBC on Hulu. Almost every single thing it has listed from the past few years on NBC was just canceled.
Hulu has so many partners that are not NBC/Comcast. Heck, even with Paramount+ out there Hulu still has major hits from CBS available. It of course has a metric ton of shows from ABC and Fox. And that does not even begin to address the assets it has available from everywhere else. Hulu has 50 content partners at the moment. If Comcast pulled all of its programming (including USA Network) it would still have 48.
It can not be ignored that Hulu is also a live TV distributor. Hulu with Live TV is the top live TV service in the industry. With as many as 4 million subscribers. Streaming-based bundles are a huge part of the future when it comes to TV bundles. Not everybody necessarily wants them, but millions of those who do are choosing Hulu, which has been strengthening its offer significantly by adding unlimited DVR, Disney+ and ESPN+ to the mix of live TV channels.
Do you really think that the live TV streaming landscape will look like it does right now in five years? At the moment as far as major streaming services go there is Hulu (WLTV), YouTube TV, Sling TV, Fubo TV, AT&T Stream, and Vidgo. My guess is at least 2 of those services will fold in the next 5 years. AT&T Stream will likely be gobbled up by Dish in a long-expected merger, and Vidgo, which has yet to make a major impact on the market despite spending big to get major brands like ESPN in the fold, has been slowly raising prices without offering new services. So once Hulu is one of say 4 providers it will be more in a position to demand access to specific shows in order to carry networks. Fine we will pay your asking price for NBC but you have to give use SNL and The Office.
The biggest reason I have seen for people doubting the future of Hulu as a brand is possibly the worst argument. That Disney+ already exists, so why not put all of the content found on Hulu on Disney+. Often critics site Disney+’s new parental settings. The parental settings were put in place for one big obvious reason. Disney wanted to be able to keep all of the Marvel content in one place. When it came time to claim the Netflix original shows that it is tying to the greater MCU as evidenced by the emergence of Daredevil and Kingpin in the MCU, it needed a way to do so and reconcile the sex and violence from those series. Eventually, you should expect to see Deadpool there as well.
But The Great? The Handmaids Tale? Series from Starz? Parents don’t want to have to worry about what is on Disney+ guys. Besides the series and movies on Hulu that Disney outright owns (FOX Studio content), the adult leaning content from numerous sources would not be marketable as part of Disney+. Disney+ is set up almost like its theme parks. You have Disney Fantasy Land (the Disney library), Disney Pixar Land, Disney Animal land (Nat Geo), Star Wars Land, and Marvel Land. It’s simple to digest, easy to market and so far wildly successful.
On the other hand, if you want to see aliens pop out of someone’s chest, or people brutally murdered in conventional ways it is safely on Hulu. Sex, F-bombs, full-frontal male nudity. Its all game on Hulu. Disney+ has no need for a crowded interface that it has to wall off from Finding Nemo and Toy Story. As a separate offering, Hulu can continue to grow and offer movies and shows from other studio libraries and continue to build its own subscriber numbers which at the end of 2021 stood at over 43 million.