What Disney’s Takeover of Hulu Means for Consumers
As Disney’s share of the streaming service grows, Hulu looks more and more like a Disney product, for better or worse.
They may have been late to the OTT party, ignoring years of pleas for an OTT ESPN product, but attitudes sure have changed in the Disney C-suite.
Taking Charge of Hulu
Disney is now reportedly in talks with AT&T to purchase their stake in streaming service Hulu, the 10% stake once held by Time Warner, which merged with AT&T last year.
Disney will also come into possession of Fox’s 30% stake, as it continues to clear hurdles to finalizing that merger.
Combined with Disney’s original 30% stake, this will add up to a controlling 70% interest in the streaming venture, and leave Comcast as its only remaining partner.
Upsetting the Balance
Hulu has always been a bit of a phenomenon: a partnership between three broadcast networks (and to a lesser degree, Time Warner) who very seldom play nice with each other.
It’s proved to be a very successful partnership too. With access to content from all three networks, they’ve always boasted a strong catalog. And through offering a free service tier for many years, Hulu cemented its place alongside Netflix and Amazon as a “Big 3” of streaming media. Must-haves for cord-cutters.
But I’d argue that a key ingredient in Hulu’s secret sauce has been their relative independence. Four minority stakeholders meant that one company couldn’t as easily quash ideas or steer the product too hard in a particular direction, even as the OTT market grew more competitive and began to threaten traditional TV revenues.
Bad business decisions were thwarted thanks to this balance of power that would have made Metternich proud.
The Zero Sum Game
All that could soon be over as Disney consolidates its power, turning Hulu from an oligarchy to a dictatorship.
If Disney senses that Hulu is competing with its new Disney+ streaming service, or cannibalizing its traditional pay-TV revenues, there’s now little to stop the company from hamstringing the service.
And if Disney doesn’t ruin Hulu on its own, rival Comcast now also has the opportunity and incentives to throw sand in the gears.
Of course, Disney may renew efforts to buy out Comcast’s share (they were already rebuffed once), taking 100% ownership. But doing so simply re-draws the same old corporate battle lines, the defiance of which being exactly what made Hulu such a potent player in the OTT space to begin with.
Disney’s new dominance of Hulu could ultimately mean bad news for both Hulu subscribers, and the OTT ecosystem of which Hulu has become a cornerstone.
The Need for Neutral Territory
Leading media analyst Alan Wolk made an excellent point discussing the topic on Twitter:
@awolk: If Comcast is smart, they will work with Disney to help Hulu succeed (or sell the whole thing to them.) Still think Disney should have just taken Hulu and made it Disney+. Regardless, the fact that Hulu has Hulu Live TV makes it a unique and valuable property
While I agree regarding the potential benefit, I see the two titanic media companies that compete with each other on many fronts as unlikely to work well together.
But that’s really at the heart of the disruption in the television space right now. Consumers don’t care about these big corporate feuds. They want content from everywhere, and they want to be able to access it easily and affordably.
When the big media brands come together to make that happen in a good experience for the consumer, customers happily fork over money.
That’s how it was for decades with cable TV, when subscribers could flip between competing networks at the push of a button.
That’s what’s needed again as consumers turn to the web. Not a dozen siloed TV apps that don’t talk to each other, not a dozen different streaming services each charging $9.99. A single agnostic media marketplace where rival networks and content providers can all make money, and where no single one of them is too powerful.
By doing this on a smaller scale, Hulu became a household name.
But AT&T, Comcast, and the other media companies of the world are not likely to have the same enthusiasm to offer their content on a platform controlled by Disney or any other media company.
