Disney+, a family-friendly streaming service that has hit a ceiling for new subscriber growth, plans to add Hulu programming later this year to make it a more attractive rival to Netflix.
Both services, along with ESPN+, will remain standalone services, for now. But Hulu will become a hub on Disney+ for current bundled subscribers of both services, aimed at providing a more seamless “one-app” viewing option.
“We’re bullish about an app that goes beyond (family friendly programming on) Disney+ that includes quality curated general entertainment,” said Disney CEO Robert Iger, adding that he believes a broader mix of programming will improve subscriber growth, retention and advertising. Disney+, which streams Disney-branded shows along with Marvel, Star Wars and National Geographic series and movies, has been less successful in luring families without young kids. A failed experiment moved “Dancing with the Stars” from ABC exclusively to Disney+, but the dancing competition is moving back to ABC this fall, though it will still stream on D+.
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He set no date for the combination, but said it would be accompanied by an unspecified price increase for the ad-free version of Disney+ in an effort to drive more people to sign up for the cheaper version with ads. The rationale? Expected “substantial growth in digital advertising” for the next fiscal year will make the ad-supported version ― with Hulu programming added ―more valuable to the company.
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The moves come as Disney, like other streamers, is ratcheting back spending on content to focus on profits rather than adding subscribers. Iger said that in “startup” mode, the company’s strategy was to “flood” Disney+ and Hulu “with as much content as possible to achieve as much subscriber growth as possible.” But now, as the business mature, “we realize we made a lot of content that is not driving subscriber growth, and we want to be surgical” in choices, he told analysts.
One wrinkle is the future of Hulu, a general entertainment service that carries original programming, reruns of Disney-owned and acquired series and shows from the FX cable network, from “Snowfall” to “Fargo.” Hulu is 33% owned by rival Comcast, the parent of NBCUniversal which has its own streaming service, Peacock. Comcast can force Disney to buy out its interest starting in early 2024, or Disney could sell its stake to Comcast. But offering a combined service suggests Disney is committed to maintaining an ownership stake in Hulu despite previous speculation that it might sell.
Asked about its plans, Iger said talks are continuing, but “I can’t really say when and how that relationship ends up.”
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