Disney Headlines for September 21st, 2022
Is Disney considering a merger of Hulu+ and Disney+ into one mega-streaming service? Definitely! Will they do it?
You’ll have to read the latest batch of Disney Headlines to find out!
Disney and Comcast Plot Their Streaming Futures
As I’ve mentioned a few times, I’m part of a streaming service podcast called Streaming into the Void.
I wouldn’t be good if my job if I didn’t anticipate what’s going to happen soon in the field of consumer streaming services.
For some time, my cohorts and I have predicted the likely merger of Hulu+ and Disney+ into a single service.
This process isn’t certain, as external factors exist. For example, I mentioned in a recent article that Disney must pay Comcast for its ownership interest in Hulu+.
How much will Disney owe? That matter remains in arbitration, but Disney had previously promised a check for at least $10 billion.
Presuming Disney keeps Hulu, it’ll owe that much, if not substantially more, if the arbiter rules in Comcast’s favor.
For its part, Comcast believes that Disney hasn’t done enough to increase the value of Hulu+. Also, Comcast would like to buy that service.
Combined with other recent rumors, Comcast executives apparently don’t care that the company currently lists $175 billion in debts. That’s a real number, by the way.
Instead, Comcast envisions a future wherein it acquires Warner Bros. Discovery AND Hulu+.
Then, Comcast would create a mega-streaming service that combines all of those current services, which are HBO Max, Discovery+, Peacock, and Hulu+.
Such a service would look a lot like…Comcast cable. So, you can understand the strategy here.
Comcast executives watch helplessly as one of their core businesses, linear television, dies.
They didn’t anticipate consumer behavior the way that former Disney CEO Bob Iger did. As a result, they’re left scrambling as they underreacted when he behaved proactively.
Hulu+ has become the prize that can either boost Disney or save Comcast as a company.
The Potential Hulu+ Merger and Its Suitors
Disney and Comcast want the same thing here. Both seek to integrate Hulu into a broader streaming service.
Comcast ceded control of its one-third share of Hulu+ to allow Disney to decide the service’s short-term future.
However, Comcast has since recognized this was a massive miscalculation. Frankly, Comcast doesn’t know what it’s doing with streaming media.
Peacock is a total failure, with nearly 10 million fewer current subscribers than ESPN+!
As a reminder, Peacock includes content from NBC, Bravo, and all other NBCUniversal-owned cable channels. It should be a juggernaut. Instead, it’s a laughingstock.
Recently Comcast has used the media and Wall Street to pressure Disney. The goal is to persuade the Mouse to sell Hulu+.
I have no idea how Comcast plans to pay for that, as it would owe at least $20 billion (!) for such a transaction.
Disney seems unlikely to do so, though. A Bloomberg Headline the other day suggested that a Hulu+/Disney+ is substantially more likely.
You may wonder why Disney wants to do that. After all, the three-headed streaming service monster of Hulu+, Disney+, and ESPN+ has allowed Disney to surpass Netflix.
Disney claims the most monthly/annual subscribers of any streaming company in the world.
That number drops by as many as 46.2 million subscribers with a merger. Also, it reduces the value of the Disney Bundle.
Most importantly, Disney+ will introduce an ad tier soon. Notably, Disney didn’t utilize the same technology as Hulu+.
So, Hulu’s content would need to reintegrate with the new Disney+ ad service.
Finally, few Americans realize this, but Hulu possesses virtually no international profile. So Disney uses its Star brand overseas instead.
In other words, there are plenty of negatives here. So why is Disney contemplating the move anyway?
Disney Plans Its Future
CEO Bob Chapek isn’t thinking about the Disney of today or even tomorrow. Instead, he’s anticipating how Disney works in a decade or more.
Like many in Hollywood and Wall Street, Chapek believes an integrated metaverse component is inevitable.
So, the executive is planning for a day where all Disney content blends in a kind of online world.
While people talk about Disney+ and Hulu+, the Mouse’s c-suite evaluates the Disneyverse. In this place, everything is possible…for a monthly fee.
You’ve visited Disneyland, but the future is Mickey Mouse World, home to all Disney content, real and imagined.
As such, a short-term collapsing of Hulu+ into Disney+ strikes me as inevitable.
Chapek seeks to train his customers to expect consolidated Disney content in a single locale. That’s the future of Disney, after all. So why wouldn’t he start it now?
An essential question is where this approach leaves ESPN. It’s not a service that ties to Disney in any manner…other than that Disney owns it.
Chapek emphatically stated that ESPN would remain part of the Disney umbrella for now.
In fact, he was kinda braggy about how much outside entities wanted but couldn’t have ESPN.
I found that telling. My suspicion is that Chapek believes ESPN has room to double or triple in value, maybe even much higher.
Down the road, Disney may sell the service at that more expensive price. Until then, the Disney Bundle appears most likely to include two products: Disney+ and ESPN+.
What’s the Endgame?
At some point, Disney seems likely to migrate all Hulu+ content to Disney+, which is already happening to a certain extent anyway.
Think about Hulu originals like Marvel’s The Runaways or Marvel movies like Deadpool. Such shows are available on both services.
Don’t you find using one service more convenient than flipping back and forth? Everyone does!
Would you even miss Hulu+ if all the shows were available on Disney+ instead? That answer is no.
Significantly, Disney spends less money by running a single service, too. That’s why I’m confident that Disney+ eventually swallows Hulu+.
Frankly, the only scenario likely to change that outcome is if Comcast somehow convinces Disney to sell Hulu.
Otherwise, a streamlined Disney Bundle experience seems all but inevitable.
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