With the full acquisition of Hulu, Disney shows its changing business model: streaming needs a refocus.
The tentacles of The Mouse reach even further. On Wednesday, Disney announced its full purchase of the streaming service Hulu, partially owned by US media giant Comcast. Disney first acquired a stake in Hulu as part of its acquisition of 21st-century Fox in 2021.
Disney will pay $8.61 billion to fully acquire Hulu, generally considered a fair market value for the platform. Hulu is the world’s 8th largest streaming platform with over 48 million subscribers. Currently, the platform is available only in the United States and Japan.
Popular shows on Hulu include The Handmaid’s Tale, Only Murderers in the Building, and American Horror Story.
With this move, Disney will fully control two of the ten largest streaming platforms. Its flagship Disney+ is the world’s third largest with over 146 million subscribers worldwide. Disney is the world’s largest entertainment media company, owning extremely popular brands like Marvel, Lucasfilm (Star Wars), Pixar, The Simpsons, and many others.
“The acquisition of Comcast’s stake in Hulu at fair market value will further Disney’s streaming objectives,” Disney CEO Bob Iger said in a statement.
Disney’s streaming strategy
Bob Iger often stated that Disney’s objective is to refocus on familiar brands and its younger user base. Streaming is a crucial step in this process, although it needs an urgent refocus too.
Following the pandemic, streaming giants like Disney+ and Netflix had to swiftly rethink their business models. Subscribers stopped growing and they realized making expensive productions just for streaming releases was not profitable at all.
According to several studies, audiences are more drawn toward streaming content only if it receives a wider theatrical release. Most experts agree that the average Netflix subscriber knows barely 10% of the total catalog of the platform.
This meant that Netflix and Disney could not afford to waste $100 million on a film production that only a small fraction of new subscribers watched. The theater remains the highest source of income for film producers, with streaming firmly in second place.
Moreover, in order to increase revenues and reduce costs, streaming platforms started cracking down on password sharing and introducing ad-based subscriptions.
In short, streaming services wanted to replace cinema, but they ended up replacing television.
In the wake of the WGA strike, which put a strain on Hollywood’s tight production schedule, streaming giants are changing business models quickly. Disney’s acquisition of Hulu is the perfect example: instead of creating brand new and unprofitable content, the best option for streamers is to license already existing and famous franchises.
With the pandemic, streamers got arrogant. Now, they are running for their lives.
