What Disney's Purchase of Hulu Will Mean

What Disney's Purchase of Hulu Will Mean for Viewers

Publish date June 3, 2019 Views: 715 Comments: 0

Hold onto your hats Hulu subscribers – the whole streaming landscape looks set to change. Earlier this year, Disney announced the launch of its own streaming site, Disney+, and is now taking control of Hulu as well.

Do we really want the likes of the Mouse House controlling our online viewing and what does this latest development for Hulu viewers? For overseas viewers, it could mean more content, but for the 25 million or so Americans currently streaming Hulu, it could mean they need yet more subscriptions in order to get their binge-watching fix.

Stick with us as we explore some of the implications of Disney’s purchase and what will happen if the likes of WarnerMedia and NBCUniversal reclaim their distribution rights, moving popular series and blockbusting movies onto their own streaming services.

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Disney Takes Control of Hulu’s Hoop

When Disney purchased AT&T’s share in Hulu last month, it secured the Mouse House 70% ownership of Hulu. If it goes ahead with its negotiations with Comcast, it could mean Disney taking over full control of the popular streaming service.

Disney’s interest in Hulu began earlier this year when it sealed a $71 billion deal with 21st Century Fox and took over its controlling stake in the streaming service. With AT&T’s share also under its belt, Disney had acquired nearly 70% of the company and looks set to finish it off with a final deal with Comcast.

To all intents and purposes, this sounds like a positive step forward. According to Disney CEO, Bob Iger, the move is “pivotal” and one the company has been planning for years. Although with ESPN+, Disney+ and Hulu, Disney would be in an ideal position to release a new bundle, Iger’s not convinced this is the way to go. Although Iger announced that Disney would not do “anything to damage the bundle”, he added that the company has had to get to grips with reality and reality says the bundle may be fit to burst!

For years, Americans have been paying for cable bundles which they barely use, picking and choosing a selection of shows from a limited number of channels and ignoring the rest. In an effort to reduce costs and encourage viewers to watch what the content creators want them to watch, it seems likely the old bundle approach will start to splinter.

Although a three-way bundle comprised of Disney+, ESPN+, and Hulu seems likely, it’s also clear that Disney isn’t attached to the bundle approach and may well place the emphasis on more specific, and more affordable, stand-alone services. Nevertheless, by pairing its services, Disney will be in a position to give Netflix a run for its money and may even lay down the gauntlet to OTT services like Sling TV.

A Glimpse of the Future on Disney’s Hulu

For most of us, who owns a streaming service doesn’t really matter much as long as we can continue to enjoy the same shows, series, and movies as we have done in the past. With AT&T pulling out of Hulu, many are concerned that they’ll take all their WarnerMedia content with them. We’re here to set your minds at rest, however.

Although Disney executives have some big plans for the future of Hulu, they have no desire to eject all the content from Comcast and WarnerMedia. On the contrary, Disney is clearly trying its best to hold onto popular content belonging to its former partners, saying that its deal with AT&T included specific terms about the continued usage of WarnerMedia content on Hulu. It seems likely any deal with Comcast will include similar conditions.

While Disney will, no doubt, promote its own original content on Hulu, this will be focused on edgier, adult content, with the family-friendly movies and series being reserved for Disney+. While some people are having a quiet cadenza about the possibility of no more ER on Hulu, others are taking it in their stride. According to one journalist, there’s very little to worry about as Hulu is central to Disney’s digital future.

In other words, if you’re already a Hulu subscriber, chances are you’re simply going to get more content for the same subscription cost. At worst, you may have to pay a couple of dollars extra each month so you can watch Star Wars or Marvel movies on an exclusive channel, but it’s really not going to change viewers experiences that much overnight.

Having said that, with the likes of AT&T and Comcast floating the idea of launching their own streaming ventures in the next couple of years, it’s possible that we will see the disintegration of bundled streaming and the proliferation of content creators all offering their own exclusive streaming services. This could be a disaster for consumers who could end up shelling out $10 per month to a variety of different streaming services, each with their own in-demand schedule.

Is the Mouse House Gunning for Netflix?

With the launch of Disney+ and the change of ownership of Hulu, many believe that Disney is going after Netflix, determined to wrest some of the streaming giant’s income away and redirect it into its own coffers. But is this really Disney’s design? While some suggest that, having made millions out of Netflix, Disney is now throwing billions at trying to compete with it, others suggest that Disney’s mind is set on a different adversary altogether – cable.

While some argue that Disney wants viewers to hold onto their cable subscriptions because it means more money for Disney, others suggest that Disney’s latest moves on this streaming front could mean that, in a few years time, it will be known as the mouse that killed cable.

Although Bob Iger has referred to Netflix as “more friend than foe” in the past, it’s doubtful that relationship will continue in light Disney’s expanding online presence. When Disney announced the launch of its Disney+ streaming service, it made it clear it planned to undercut Netflix, offering the service for just $6.99 per month, compared to Netflix’s basic subscription of $8.99.

Earlier this year, Hulu also slashed the price of its subscriptions in an effort to boost its viewer numbers – a move that was decidedly positive, securing for Hulu a dramatic year-over-year increase of nearly 50%. With concrete plans to roll out Hulu to international viewers as well, it seems obvious that Disney’s real competition is Netflix, not cable, and that Disney is taking a cut-throat approach to its streaming services.

According to Iger, not only will Hulu and Disney+ observe the need for local products, the company already has “more product that travels the world than they [Netflix] do”. This isn’t going to be a traditional game of cat and mouse and it seems some fur will fly before the winner is revealed.

Mickey Mouse Money: The Cost of Cable Cutting

Disney is plowing millions of dollars into its new streaming ventures and seems unperturbed by predictions that they could lose somewhere in the region of $3.9 billion in the 2019 fiscal year and as much as $4.9 billion in 2020.

Having said that, online streaming is a big business and could mean some serious profits in the long run. Last month, Hulu was valued at $15 million but, since Disney and Comcast made their deal, it’s predicted to reach over $27 billion in the next five years alone.

It’s a gamble but one that Disney can afford to take, especially after consuming 21st Century Fox. Last year, Disney made over $10 billion in profit so will be sitting pretty even if it loses half of that in the pursuit of streaming supremacy.

The Competition

Despite concerns about the negative impact new streaming sites like Disney+ and whatever AT&T and Comcast come up with, others believe the increased competition will only improve streaming services, giving consumers more choice and more control over their viewing.

Disney isn’t the only movie maker out there considering a more direct relationship with its customers. Since selling its 10% share of Hulu to Disney, AT&T is proposing the launch of their own direct-to-consumer streaming site while there are some loud whispers that Comcast is planning something similar with its Xfinity Flex service.

So, whereas you were once happy to watch Netflix and enjoy offerings like The Secret Life of Pets from NBCUniversal (owned by Comcast), Avengers: Infinity War from Disney, and Pokemon Detective Pikachu from WarnerMedia (owned by AT&T), in the future you may need a different streaming service for each entertainment conglomerate.

The Bottom Line

Although Disney is in a strong position to challenge Netflix, with Disney+, ESPN+, and Hulu creating a tempting trifactor streaming service, it isn’t the only entertainment company looking at developing its own streaming sites. With AT&T and Comcast snapping at Disney’s heels, the race to the top is going to be a tough one.

While Netflix is the undisputed king of streaming at present, it may soon find itself unceremoniously knocked off its pedestal. According to Forbes, Netflix is hiding a mountain of debt and needs to something pretty amazing if it’s going to reduce the $10 billion or so it currently owes its creditors.

With Disney launching into online streaming in a big way, Netflix may find it difficult to compete with this “undisputed king of content“. It’s not only Netflix that could undergo some serious changes as a result of Disney’s purchase of Hulu and launch of its own streaming site. Disney’s foray into online streaming could change the whole digital landscape, forcing subscribers to leave behind bundles and embrace subscriptions to individual channels that provide the content they’re looking for.

Although the exponential proliferation of streaming services could be devastating for subscribers, who could see themselves shelling out for multiple subscriptions each month, on the plus side, as competition gains momentum, the price of those subscriptions could plummet.

While the future of streaming remains to be seen, Disney is undoubtedly a serious competitor that could leave Netflix in its wake as it races towards the finish line.

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