The Walt Disney Co., which helped launch the video provider nearly 12 years ago, already owned two-thirds of the streaming and on-demand video service.
Disney had grown its share through its $71.3-billion acquisition of 21st Century Fox’s movie and TV studios, which closed in March, and its $1.43-billion deal for the 9.5% share that AT&T owned. AT&T got that in its own media merger last year, an $85-billion deal for Time Warner.
That left Comcast, which owns NBCUniversal, as the only remaining non-Disney Hulu stakeholder, holding one-third. (Comcast/NBCUniversal, Disney, Fox and Time Warner were early Hulu investors.)
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Disney now gets immediate complete control of Hulu, according to the deal the companies announced Tuesday, and will pay Comcast at least $5.8 billion for its Hulu stake in five years. It could receive more, depending on whether or how much Comcast invests in Hulu over the period.
What’s it all mean for binge-watchers?
Perhaps the most important condition of the deal is that NBCUniversal parent Comcast will keep NBC shows such as “Saturday Night Live” and “The Office” on Hulu for five years. That’s good news for consumers, says Jim Nail, principal business to consumer marketing analyst for research firm Forrester.
The decision signals “no sudden disruption” of what subscribers expect from Hulu, he said. “It also shows that both NBCU – which, of course, plans to launch its own service early in 2020 – and Disney are being thoughtful about the consumer experience, and will approach future changes cautiously.”
Disney’s magic streaming kingdom
With control of Hulu, Disney can eventually offer a customizable bundle of video services direct to homes. Remember, it has a Disney+ subscription service stocked with Disney and Pixar films, as well as Marvel and “Star Wars” movies, due to launch Nov. 12 for $6.99 ($69.99 annually). Current box office smash “Avengers: Endgame” hits the service Dec. 11.
The company already has its own ESPN+ service, which is just more than a year old.
This video trifecta gives Disney the ability “to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers,” Disney CEO Robert Iger said in a statement Tuesday.
He delved more deeply into the potentials later Tuesday morning in an interview at an event hosted by tech research firm MoffettNathanson. The deal has “a lot of synergies involved with it,” Iger said. “We’ll be able to manage customers across all platforms … giving the consumer the ability to buy one, two or three of them.”
Disney video subscribers could also get special experiences and discounts at the company’s amusement parks, Iger suggested. Disney is opening new Star Wars: Galaxy’s Edge areas in Disneyland this summer and Disney World this fall, for instance.
The potential in connecting, say, Star Wars fans “to the broader experience Disney can offer through the theme parks, merchandise (and) not just the movies,” Nail said, “will be a far more interesting kind of ‘bundle’ to watch.”
More TV ads in your streaming future?
Cord-cutting has fueled media consolidation, which gives massive media companies the ability to get subscribers directly. But not all people can afford multiple streaming subscriptions.
Advertising could be a way to grow a service’s subscriber base. Hulu already offers its lower-priced tier of on-demand video with advertising. But NBCUniversal earlier this week said its streaming service, due to launch next year, would be free and ad-supported.
“It seems to me advertising is going to become more prominent,” said CFRA Research analyst Tuna Amobi. “But it remains to be seen how much ad loads and formats we will see. Every service is different.”
Signs of streaming changes coming
Netflix is the current streaming leader, with 60.2 million paid U.S. subscribers and, according to research eMarketer, 157.3 million viewers. Hulu has the third-most viewers at 63.9 million, behind Amazon at 96.6 million, eMarketer estimates.
The Disney-Comcast deal, which places Hulu’s value at $27.5 billion or more in five years, foresees Hulu’s continued growth as a bigger player in the entertainment landscape. The service was valued at $15 billion when Disney bought AT&T’s stake last month.
Hulu recently announced it had surpassed 28 million subscribers, 26.8 million of which were monthly paid subscribers.
Hulu has multiple subscription tiers including a $5.99 monthly subscription to stream (with some ads) current series such as “This is Us” and its original programs such as “The Handmaid’s Tale” – and recent release “Shrill” starring SNL’s Aidy Bryant, and “Catch-22” directed by George Clooney, which begins Friday. An $11.99 tier comes with no ads. A $44.99 subscription also includes Hulu’s Live TV service with 60-plus channels including more than 800 local broadcast network affiliates across the U.S.
But the number of streaming services will continue to multiply. Beyond Disney’s new service coming later this year and NBC Universal’s in 2020, AT&T’s WarnerMedia also has its own subscription service, with a beta version to launch in the fourth quarter of 2019, AT&T CEO Randall Stephenson said Tuesday at a presentation hosted by J.P. Morgan Global Technology. (AT&T also owns satellite TV service DirecTV and live TV streaming service DirecTV Now.)
The service will include movies and TV series from HBO, Turner and Warner Bros. “Everything from ‘Casablanca’ to ‘Aquaman’ and ‘A Star is Born’ and so forth,” Stephenson said. Also in the Warner Bros. library: “Friends,” “Seinfeld,” and “The Big Bang Theory.”
WarnerMedia will be getting the licensing rights back to “put on our own (streaming) product,” Stephenson said.
Its service may even debut some of its shows on the streaming service before they hit regular TV, Nail says.
“You get the picture of an enormous shift in the entertainment industry toward streaming,” he said. “But streaming more importantly creates a direct relationship between content creators and consumers, which will open new possibilities.”