When the Disney and Fox deal comes to a close, the Mouse House will hold 60% ownership of streaming giant Hulu. While some have speculated that with the launch of the Disney+ streaming service next year the studio might shut down Hulu, Walt Disney Company CEO Bob Iger this week affirmed a commitment to the brand.
In fact in his investment call this week, Iger plans to make Hulu an even bigger player in the streaming wars saying: “Given the success of Hulu so far in terms of subscriber growth and the relative brand strength and other things too like demographics, we think there’s an opportunity to increase investment in Hulu notably on the programming side.”
With Disney+ expected to focus on family-friendly fare, Hulu is expected to become the home of more adult-targeted programming and will likely include much of Fox’s film and TV library. At present Hulu spends around $2.5 billion on original programming annually, a far cry from the $8 billion Netflix pumps into its content.
The biggest frontier, however, has yet to be tackled – overseas. Not including streaming players from local markets, the only companies really doing business on a global VOD and SVOD scale are Netflix, Apple and Amazon. Services like Hulu, HBO Now, Showtime, Starz, Vudu, and many others are either entirely restricted to the U.S. or have only been tested in a very small handful of overseas markets. Hulu, for example, is only available in U.S. territories and Japan.
With Disney obtaining majority ownership of Hulu, Iger hints the service might finally tap into that world of potential subscribers out there: “After the deal closes and after we have the 60 per cent ownership, we’ll meet with the Hulu management team and the board, and discuss what the opportunities are in terms of both global growth and investing more in content, But that’s something that we have to do after the deal closes.”
It will also depend on the other two key investors – Comcast and AT&T Time Warner. Comcast has seemingly little interest in markets outside the United States, while WarnerMedia will soon be launching its own streaming service and may pull out what eggs it has in Hulu to put them in its own basket.
Iger says should they want to divest their interest, Disney would be up for acquiring their stakes. He tells CNBC: “It is premature really except to say that if Comcast is interested in divesting, or if Time Warner or AT&T Time Warner is interested in divesting, we certainly would be interested in buying their stake. But with 60 per cent, which is what we will own, we’ll have enough control to manage Hulu in a way that is consistent with the strategy the company is deploying.”
The report comes as within the U.S., Hub Entertainment Research’s latest analysis of viewing habits has found that when people want to watch a favourite series, they turn to on-demand online VOD and SVOD sources as opposed to live TV and DVR recordings.
In a poll of 1,700 regular TV viewers between 16 and 74, 56% watch shows from an online source as opposed to 44% via a set-top box (live TV, DVR, VOD combined). As little as three years ago, that ratio was reversed with 2015’s results at 43% online and 56% via set-top box.
Netflix also for the first time emerged as the No. 1 source for watching favorite shows, with 32% of respondents saying they use the streaming service compared with 26% using traditional live TV. Word of mouth and social media was also how most viewers found shows these days (35%) as opposed to traditional advertising (29%).