Hulu in position to challenge Netflix
In the burgeoning business of streaming television shows, Hulu has long been viewed as the distant runner-up to Netflix.
But with Walt Disney Co. poised to take a controlling stake in Hulu, the little 10-year-old streaming service once known solely for airing reruns of broadcast shows online could eventually become a credible threat to Netflix’s dominance.
Disney would own 60 percent of Hulu if its proposed $52.4 billion purchase of 21st Century Fox is approved by regulators. Hulu is currently equally owned by Fox, Disney and Comcast, each of which has a 30 percent stake. (Time Warner owns the other 10 percent.)
If Disney’s acquisition of Fox closes in 2019, Hulu is expected to become a pillar of Disney CEO Bob Iger’s strategy to take on streaming video insurgents that are disrupting the traditional media industry.
The deal could give Disney a leg up in its plans to introduce its own streaming services. Disney is planning to launch two such services in the next two years — one for sports content, the other for Disney-branded offering powered by brands such as Marvel, Pixar and Lucasfilm.
Hulu would be another important part of the strategy to compete for consumers who are cutting the cord. In a business driven by the volume of quality content, Disney could boost the service’s standing with more shows. Hulu, which operates only in the U.S. and Japan, could also expand internationally under Disney’s watch and benefit from the company’s marketing clout.
Iger signaled his ambitions for Hulu Thursday. In a call with analysts, he said Hulu would be the destination for more grown-up shows and movies that would be misfits on a more family oriented Disney service.
As part of the Fox sale, Disney would control the 20th Century Fox movie and television studio, which produces much material at odds with the Mouse House’s squeaky-clean reputation. Fox makes such movies as “Logan,” “Deadpool” and “Alien: Covenant,” and TV shows including “Family Guy” and “The Simpsons.” Disney would also take over FX Productions, known for “Archer” and “Fargo.” Another boon for Hulu could be prestigious independent movies from Fox Searchlight.
“What we envisioned is actually taking Hulu and making it basically the home of adult programming where the ABC product would go, where the FX product would go, where the output of the studios that was not branded Disney, Marvel, Pixar, et cetera would go,” Iger told analysts.
For now, Netflix is the undisputed champion of streaming TV. Subscribers spend more than 140 million hours a day on the platform, whose successful shows include “Stranger Things” and “House of Cards.” The company had nearly 110 million subscribers worldwide as of Sept. 30. Hulu says it has 47 million viewers, but does not break out the number of subscriptions.
Netflix is outspending both Hulu and Amazon, which has also been making a push into the content business. Netflix is expected to spend as much as $8 billion on content next year, dwarfing the $2.5 billion Hulu invested in 2017. Amazon had an estimated $4.5 billion content budget this year.
Yet, Hulu has had more buzzworthy success after years of playing catch-up to its two bigger rivals. The joint venture has received critical praise for some of its original shows, such as “The Handmaid’s Tale,” which this year became the first streaming show to win the Emmy for best drama.
Hulu recently strengthened its lineup with shows such as teen superhero show “Marvel’s Runaways” and sci-fi comedy “Future Man,” both of which premiered on the service last month.
However, Hulu’s rise has not been a smooth one. The traditional media companies launched Hulu as a joint venture in 2007, but have rarely agreed on how to court digital audiences.
Hulu changed its leadership in October, even with signs that it was gaining traction. The company hired high-level Fox television executive Randy Freer as its chief executive to replace Mike Hopkins, who moved to Sony Pictures Entertainment.