• by Wayne Friedman , June 6, 2023

Although advertising issues for Walt Disney’s Hulu are expected to continue at least through much of 2023, engagement data -- daily minutes per subscriber -- are still strong, one analyst says.

Hulu's video-on-demand platform is at an Nielsen-measured 69 minutes per day per subscriber/active user in the first quarter of this year. Only Netflix -- at 94 minutes per day -- is higher, according to analysis by Morgan Stanley media analyst Benjamin Swinburne.

Hulu's continued benefit, he says, comes from its bundling with Disney+ in the U.S., which also comes with ESPN+ as an option.

Hulu has nearly 50 million U.S. subscribers, which Swinburne says is “a level of scale that should enable financial success.” This compares favorably, for example, to HBO (linear TV and streaming) at 45 million-50 million subscribers, and to Netflix's approximately 70 million.

Swinburne says in a Tuesday morning note: “The Disney bundles remain a potential path towards streaming profits for the company.”

The downside for Hulu, he says, is the current and near-term period of weakening advertising revenues -- down 7% in the fourth quarter of 2022 to $850 million -- with a a steeper drop of 16% to $700 million in the first quarter of 2023 versus the same period a year ago.

Morgan Stanley estimates the second quarter of this year will see $811 million in advertising revenue (down 9% versus a year ago), with $753 million in the third quarter (5% lower).