It's official. The Walt Disney Company's (DIS -0.45%) stand-alone streaming service Hulu is going away...sort of. The company announced on Wednesday that Hulu will soon be fully integrated into Disney+, although it will still be its own category within the Disney+ menu. Hulu will also replace Star in the international version of Disney+.
That's not the detail that interested investors will care the most about, however. Even more noteworthy is the fact that Disney will no longer be reporting the number of streaming subscribers for either service, or how much revenue these accounts generate every month. The decision removes two of the most closely watched metrics that investors are currently using to gauge the health of the company's increasingly important streaming business.
Here's what you need to know about all of it.
Another (mostly) solid quarter
As a recap, The Walt Disney Company turned $23.7 billion worth of revenue into an adjusted per-share profit of $1.61 for its fiscal third quarter of 2025, which ended in June. The bottom line was up from the year-ago comparison of $1.39, and handily topped expectations for earnings of $1.47 per share. The top line, though -- while 2% better than sales in fiscal Q3 2024 -- fell just a bit short of analysts' estimates, sending shares lower as a result.
Blame the company's cable television arm, mostly. Linear network revenue slipped 15% (with most of the setback stemming from Disney's international TV business), dragging cable TV's operating income down 28% year over year. Theme parks, films, and sports ventures, in contrast, did pretty well given the challenging economic environment.
And Disney's streaming division? It's doing pretty well too. Its revenue grew 6% year over year to nearly $6.2 billion, leading to an operating profit of $346 million versus the slight loss reported for the same quarter of 2024. This extends a healthy streak of slow but persistent progress:
Data source: The Walt Disney Co. Chart by author. Figures are in millions.
The company's direct-to-consumer arm added another 1.4 million Disney+ subscribers to the fold last quarter as well, with 1 million of them signing up for the U.S.-Canada platform. Hulu added 1.3 million streaming subscribers of its own, although it also lost a couple of hundred thousand subscribers to Hulu's live-TV service. And again, this extends tepid but long-established growth trends:
Data source: The Walt Disney Co. Chart by author. Figures are in millions.
This is the next-to-last time, however, the chart immediately above will be able to be updated.
No more subscriber metrics
It's true. As CEO Bob Iger noted in his executive commentary published along with Wednesday's earnings report, "We believe quarterly updates on the number of paid subscribers and ARPU [average revenue per user] have become less meaningful to evaluating the performance of our businesses, and we will no longer report these metrics starting with the first quarter of fiscal 2026 [beginning in October] for Disney+ and Hulu." The company will, however, continue to share information about its streaming business's overall profitability.
Iger explains: "We believe our reporting going forward will better align with changes in the media landscape, the unique nature of our integrated assets, [and] how we operate our businesses, and will reflect how management evaluates the progress and success of our strategic initiatives."
If it sounds like CEO prattle, though, that's because it arguably is.
Image source: Getty Images.
Don't misunderstand. At least in some ways the decision does "align with changes in the media landscape." Early last year streaming rival Netflix (NFLX 2.65%) made the same decision to stop disclosing its subscriber counts and ARPU (as of the beginning of this year), aiming -- as Disney is now -- to put the focus on more meaningful metrics like revenue and profitability.
Like Netflix's then, the timing of Disney's decision suspiciously coincides with a measurable slowing of its streaming business's subscriber growth, removing two of the more-watched measures of the entertainment giant's progress when investors need them the most. Perhaps at least some of Wednesday's setback was the result of waning transparency, and wasn't just in response to the company's revenue shortfall.
Opportunity knocks
So what does this mean for investors?
The market was largely prepared for the fold-in of Hulu into Disney+ already. The possibility was first floated several quarters ago, and making Hulu's content available to its subscribers from within the Disney+ app early last year was an obvious step in this direction. Combining the two services into a single one now -- with a single payment -- isn't exactly a big leap, technological or otherwise.
As for its impact on marketability, although the combo isn't any more marketable, it isn't less marketable either; the cost of subscribing to both is only between $1 and $4 more per month, depending on your plan. Indeed, in light of the media company's relatively new focus on monetizing both streaming services' content by injecting advertisements into its programming, anything that makes it easier to watch any of Disney's streaming content is a win for this fast-growing business. Adding Hulu to Disney+ at least does that.
It will also just be cheaper to manage one content stack rather than two different ones, which is another modest win for The Walt Disney Company.
But the decision to not share a couple of key customer metrics that investors had grown accustomed to seeing?
Sure, that's a sticking point for some current and would-be shareholders...although maybe not as much of one as you might think. Netflix's shares also initially stumbled in response to word that it would no longer be reporting subscriber numbers, but its stock has more than doubled since that April 2024 low, reaching record highs in June.
Investors mostly just want to see strong top and bottom lines, which Hulu and Disney+ can certainly team up to deliver. Data from streaming-market research outfit JustWatch indicates that, when combined, Hulu and Disney+ are collectively just as watched within the U.S. as Netflix, as well as Amazon's Prime. They were also two of only three streaming platforms to gain U.S. viewing time during the second quarter of this year (with the third being Max). So, this pairing should hit the ground running.
Let's also not forget that the entirety of Disney's direct-to-consumer business still only makes up about one-fourth of its total revenue. Whether its streaming arm thrives, flops, or something in between, almost all of its other ventures are doing just fine anyway.
More to the point, there's nothing about the Hulu-Disney+ decision, or last quarter's results, that's a reason to steer clear of the stock. In fact, since it's already down from its early-July peak, Wednesday's setback is arguably a great opportunity to step into very ownable Disney shares.
The analyst community thinks so, anyway. The vast majority of them currently rate Disney stock as a strong buy, with a consensus price target of $135.12 that's 17% above the ticker's present price.
