• by Karlene Lukovitz  @KLmarketdaily, November 22, 2022

While Disney has long offered bundles that include Hulu and/or ESPN+ with Disney+, a truly merged Disney+ and Hulu has the potential to further ramp up the combo’s power for attracting new subscribers and retaining existing ones.

With Disney set to buy out Comcast’s 33% share of Hulu by January 2024, if not sooner, to own 100%, a new analysis from Ampere underscores the potential competitive power of a combined offering of the services.

Currently, a merged combined offering of Disney+ and Hulu would account for the largest share of the 100 most popular titles of any U.S. subscription video-on-demand (SVOD) service, according to Ampere’s Popularity Score metric, which tracks overall online engagement with a title. At approximately 30%, such a combined service would have a comprehensive lead over Netflix’s 23% (chart above).

Among hit titles would include shows from Disney’s Marvel Studios and Lucasfilm and Hulu originals such as “Only Murders in the Building” and “The Handmaid’s Tale.”   

Disney management has suggested publicly that the company would like to move up the takeover timetable, for the right price —although some reports suggest that Comcast is resistant to a pre-2024 sale. (While there are strategic unknowns in the wake of Bob Chapek’s ouster and Bob Iger’s return as Disney’s CEO, the 2019 Hulu agreement with Comcast occurred during Iger's original tenure as Disney CEO.)   

Several other factors also point to Disney likely planning a merger of the two streamers, according to Ampere.

The analysis notes that between September 2016 and September 2022, Disney’s share of owned distribution rights to Hulu content grew from 6% of movies and TV shows to 19%, suggesting that Disney has made significant investments in Hulu in preparation for full ownership and a merging of the services.

Additional pressure to combine the services lies in third-party content trends. The major studios without streaming platforms have reduced their contribution to Hulu’s content slate (down from 81% in 2016 to 71% in 2022), and those with their own streaming services have generally maintained or reduced their input. Specifically, the combined content from NBCUniversal, Paramount Global and Warner Bros. Discovery now makes up less than 10% of all TV shows and movies on Hulu.

The removal of content from Hulu to support newer services such as Peacock, Paramount+ and HBO Max poses a threat to Hulu’s competitiveness. The streamer has already lost highly popular titles such as “America’s Got Talent” (to Peacock), movies and TV shows set within the Star Trek universe (to Paramount+) and “Family Matters” (to HBO Max).

In other words, if major studios continue to reclaim their proprietary content, Hulu could lose 10% of its overall catalog — and 37% of its most popular titles, as defined by the Popularity Score metric.

“The threat of further popular or critically acclaimed titles leaving Hulu for rival platforms is a concern, as engaging content is critical for subscriber retention, especially as the U.S. SVOD market nears saturation,” points out Ampere analyst Christen Tamisin. “This risk makes the argument for Disney to merge Hulu and Disney+ into a single platform stronger.”

A combined catalog of the services’ complementary content would result in a more diverse offering — akin to other major market players — than the two standalone platforms have currently.

“While the Disney brand has long been associated with family-friendly content, Hulu has a broader, general-audience appeal, offering a wide range of genres and more adult-targeted titles,” Tamisin notes.