Hulu's lack of presence abroad has meant that Disney+ looks significantly different outside the U.S. Disney (DIS 1.01%) offers a considerable amount of Hulu content on Disney+ in other countries, providing more value to international subscribers.
Here's why the domestic Disney+ service should take cues from its international counterparts and consider merging its content portfolio with Hulu.
Increased value
Disney+ launched in the U.S. and multiple other countries in November 2019, expanding to Europe in March 2020. The streaming service is now available in over 64 counties, with plans to increase that number to 160 in 2023.
Alternatively, despite Hulu's 15-year run, it's only available in the U.S. and Japan. The absence of Hulu abroad has led Disney to offer a significant amount of Hulu content on Disney+ overseas.
In Europe, Disney+'s home screen presents six main categories of content: Disney, Pixar, Marvel, Star Wars, National Geographic, and Star. The Star section of the platform is home to more adult content, such as popular Hulu originals Only Murders in the Building and Dopesick, as well as FX favorites It's Always Sunny in Philadelphia and American Horror Story. Disney offers mature content alongside parental controls similar to Netflix, which allows consumers to create profiles strictly for kids that adhere to a specific content rating.
While $7.99 grants U.S. Disney+ subscribers access to a library of traditional Disney content such as Marvel, Star Wars, and Pixar, members in other countries like the U.K. can pay 7.99 pounds ($9.60) and watch many Hulu and FX originals, as well. For less than $2 more, overseas Disney+ members receive an all-in-one platform that offers something for the whole family.
Not every Hulu original is present on the service abroad, but there's a large enough variety to increase Disney+'s value and create a well-rounded service. The best way for U.S. consumers to currently access the same content is through Disney's bundle, which offers Disney+, Hulu, and ESPN+ for $13.99.
Palatable price hikes
Disney made headlines in mid-July when it announced a 43% price hike to ESPN+ with a monthly subscription going from $6.99 to $9.99. As competition in the streaming industry continues to rise and subscriber retention becomes more difficult, price hikes will be inevitable.
Disney+ currently operates at an industry-low monthly subscription fee of $7.99, with HBO Max and Netflix costing around $14.99/month for ad-free streaming. The low price has been favorable for subscriber growth as Disney+ only launched in November 2019. However, a price hike is likely down the road.
A merger can make further price increases more palatable and curb subscriber retention. Hulu is currently $6.99/month with ads and $12.99/month without them. If Disney+ absorbed Hulu, the company could adopt a similar price model and market it alongside Hulu's extensive library being added to the service. The move would also decrease subscriber churn as Disney+ would become nearly undroppable. The platform would offer its own-brand children's programming, Star Wars, and Marvel content, as well as more adult series from Hulu and FX.
Additionally, consolidating Hulu and Disney+ would cut costs for the company, saving on the expenses of running three platforms and making it easier for consumers to navigate their streaming services. Subscribers would use Disney+ for all their film and TV needs, with ESPN+ reserved for sports. The popular Disney bundle could retain its $13.99/month fee, grouping Disney+ and ESPN+ while still providing substantial value against the competition and pocketing the savings from slimming down to two streaming services.
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Key Data Points
Is a merger possible?
Hulu began as a joint venture between multiple companies led by Comcast in 2007, with Disney becoming a partner in 2009. However, Disney's 2019 acquisition of 21st Century Fox gave it a 60% majority stake in the service, with Comcast the only other shareholder at that time. Since then, Comcast has relinquished its control and sold its 33% stake in Hulu to Disney, effectively making the streaming platform a division of Walt Disney.
Hulu's complex history has led Disney to take complete control of the platform, free to do with it as it pleases. The streamer is undoubtedly a fierce competitor in the industry, having an 11% market share in the second quarter of 2022.
Its value is substantial, but at the end of the day, Disney is one of the most recognizable brands on the planet. A merger would only increase the Disney+ platform's chances of overtaking Netflix and dominating the industry.
