Hulu turns 15; what's its long-term future?
At 48 million users, Hulu is one of the most popular streaming services, even if it’s not as big as Netflix, Amazon Prime Video, or sister service (since 2019) Disney+. The green-themed platform is limited to the United States, where it’s been a longtime streaming mainstay since its launch in October 2007. FlixPatrol states it’s currently the US’ third-most-subscribed streaming service, after Amazon Prime Video and Netflix. Non-Americans get the Disney-owned Hulu material via Disney+, under the “Star” category.
Of course, Hulu’s gone through a lot of changes over the years. Anyone remember when it went by “Hulu Plus?” Or had a free ad-supported tier before becoming a pay-only service? Or the time in 2015 it had a Tumblr page offering animated GIFs?
Among Hulu’s noteworthy programming includes “The Handmaid’s Tale,” “What We Do in the Shadows,” “Only Murders in the Building,” the “Animaniacs” reboot, and the “Predator” prequel movie “Prey.” It’s also the home of a sizable amount of Japanese anime. Hulu’s signature feature, however, has been carrying TV shows from broadcast and cable networks, some (usually ABC or Fox shows) the day after they air.
Since 2016, Hulu’s also offered “Hulu + Live TV,” a cable-replacement streaming service. The Disney buyout of Fox in 2017 also gave the Mouse House majority control over Hulu, with Comcast owning what’s left (despite the latter launching Peacock).
My experience with Hulu
I’ve had Hulu off and on for years, mostly between it being inexpensive and coming with a subscription to something else (Spotify or Disney+). Upgrading to the ad-free version last year has seen me use Hulu a lot more—it’s definitely one service that’s better without the ads. Still, the ad-based version is often on sale at a steep discount on Black Friday.
Hulu paired up with Disney+ also works pretty well as a bundle (and Netflix alternative), with the two making up for each other’s weaknesses. Disney+ brings all-ages programming, the Marvel and “Star Wars” franchises, and the Disney animation library. In turn, Hulu brings adult-oriented programming, some third-party material, and the Fox film library.
Disney’s advertised the “Disney+ bundle” plenty, including their CGI animated “Bundletown” TV ads. Look for Bender from “Futurama” 10 seconds in, the balloon house from “Up” in the final scenes, and the Avengers Tower in the background. I also note as of this writing, the Disney+ bundle costs $13 (with ads in Disney+/Hulu) or $20 (ad-free).
What's Hulu’s future?
For Hulu’s 15th anniversary, the service is making some effort to celebrate. This includes a special Fanta brand lime and ginger-flavored soda as a Disneyland exclusive.
However, Hulu’s long-term future seems to be up in the air. Currently, Disney owns two-thirds of the service, while Comcast owns the other third. As part of the Disney-Fox merger, a sale of Comcast’s share can be forced as of 2024: either Disney forcing Comcast to sell their share, or Comcast forcing Disney to buy their share. However, Hulu’s guaranteed minimum value is set at $27.5 billion, making it at least a $9 billion cost for Disney to buy Hulu.
While neither Comcast nor Disney is saying much, there’s been much speculation on what’ll happen to Hulu. Below are what I see as possible scenarios.
A. Disney buys full ownership of Hulu from Comcast
The simplest scenario is the presumed one: Disney ponies up the money to buy Comcast out next year, and fully own Hulu.
The advantages of this scenario:
It’d be the current status quo. Hulu is already basically treated as Disney’s adult programming arm, while Comcast recently pulled much of its programming off Hulu to shore up Peacock (which has less than half the subscriber base of Hulu).
Apparently thanks to the ads, Hulu earns more money per subscriber than Disney+ in North America does.
Comcast could keep focusing on Peacock.
Merging or bundling streaming services is popular right now, as seen with the impending merger of Paramount+/Showtime and HBO Max/Discovery+.
Bragging rights: Hulu and Disney+ customers combined place Disney as the second-biggest streaming service provider in the world. Counting ESPN+, the Mouse comes in at #1, above Netflix.
The disadvantages:
Disney’s trying to cut down on its debt, and coming up with billions to buy Hulu might be a strain. I note $9 billion is more than what Disney spent to buy Marvel and Lucasfilm ($4 billion each) combined.
Disney technically doesn’t really need Hulu; it could just fold its adult programming into Disney+ under a US version of the “Star” category, like it does internationally. The ship’s already sailed on the idea of Disney+ not having older-skewing material, anyway, versus when they tried shoving “Love, Victor” to Hulu, despite Disney+ carrying “The Simpsons.” (“Victor” has since appeared on Disney+.) The US version of Disney+ carries the adult-oriented Netflix Marvel shows, as well as “Deadpool.” They’d just have to advertise parental controls more with a US version of Star.
Disney fully owning Hulu would leave it with two options: keep it as a stand-alone service, with a bundle option with Disney+ (the status quo), or shut down the on-demand version and fold it into Disney+ (as a Star-like category for adult programming). I could see arguments for either scenario, though keeping Hulu around might have advantages:
Hulu appeals to people who don’t want to buy Disney+, or for its cheap price (currently $8/month for the ad-based version, or $80/year).
The ad revenue Hulu generates.
Hulu’s a familiar brand name to Americans.
B. Disney sells Hulu to Comcast
Under this option, Disney sells its share of Hulu to Comcast, which would cost the cable conglomerate at least $18 billion.
Advantages:
Disney generates some needed money.
Disney can avoid running another streaming service, and simply launch a US version of Star for “Family Guy” and the like.
Comcast would get a streaming service that’s much more popular than its own.
A few analysts suggest Disney could use a Comcast deal to get back the solo movie rights for Marvel characters the Incredible Hulk and Nam or the Sub-Mariner from Comcast. Universal has the rights, which is why you won’t see the Hulk show up on a solo basis in any Marvel Cinematic Universe film.
Disadvantages:
Comcast has issues running Peacock as it is. Also, would they shutter Hulu Live (since it’s basically competing with their own cable TV arm)?
Comcast might not be in the mood to drop that kind of cash to buy Disney’s share.
Disney has spent years advertising the Disney+ bundle, as well as using Hulu as its adult programming arm. At this point, Hulu is closely tied to the Mouse House, and not so much to Comcast. Unwinding said bundle, along with the Disney-made programming, etc. seems complicated. For instance, I pay for the Disney+ bundle through Hulu; would I be stuck setting up two fully separate accounts, and managing two bills, for Disney+ and Hulu? (Assuming I didn’t just cancel Hulu first—Comcast already gets enough money from me for broadband.)
Some have noted without Disney’s programming (including ABC, FX, the Disney-made Hulu Originals, etc.), that wouldn’t leave Hulu with much.
Given Marvel’s flagship hero, Spider-Man, has his movie rights basically with a rival studio (Sony), I’m not sure Disney’s in a hurry to get Namor and the Hulk back, or use an already-complicated deal to do so.
C. Comcast/Disney sell Hulu to a third party
The unlikeliest option in my opinion: both companies sell Hulu to some third party, whoever that would be.
Advantages:
Disney and Comcast could just focus on their own streaming services.
A presumed short-term cash intake.
Disadvantages:
Disney has the same unwinding issues I mentioned above.
Getting Comcast and Disney involved to sell to another party seems even more complex.
I don’t see who else would buy Hulu at this point, especially at around $28 billion minimum. We’ve pretty much hit “peak streaming” in the “streaming wars,” with everyone interested now having a streaming service. If anything, the current trend is toward consolidation or bundling: see Paramount+/Showtime, or HBO Max/Discovery. The only possible buyers I can think of are Microsoft (re: tech companies) and Sony (re: media conglomerates), neither of which sounds likely.
Conclusion
While we’ll see what happens in 2024, I expect scenario “A” to play out, and Disney just buy Comcast’s share of Hulu, in spite of the cost. As for whether Hulu would stick around as a stand-alone service, or get folded into a category under Disney+, I’m not sure. Still, I think Hulu still has value as a familiar brand to Americans; I don’t see the name going the way of Quibi.
Do you subscribe to Hulu, or have any favorite Hulu originals? Any thoughts on what you think will happen to Hulu long-term? Feel free to list them in the comments.
Image from Hulu's 15th anniversary page. (Hulu / screenshot by author)