Disney is planning to compete with the worlds largest video streaming video Netflix and Amazon as well. Disney owns 60% of Hulu which makes them the biggest shareholder of Hulu and allows them to fully take control of Hulu’s operation. According to Disney chairman and CEO Bob Iger, “Hulu represents the best of television.”
Though Hulu is now under the Disney product, Comcast’s NBCUniversal will continue to license content to Hulu until late 2024.
Iger said, “We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers.”
With the control, Disney has now the power to set a new approach for Hulu which includes its plan on going international. Trip Miller, managing partner of Gullane Capital Partners said, “It is important for Disney to have full control of the direction and content on Hulu. Postponing the closing five years (later) allows Disney to not take on more debt after just closing (its purchase of) Fox while giving Comcast an option to the upside if/when the Hulu valuation grows during this time.”
As of May 2019, Hulu has over 27 million paid users. “As Disney continues to grow their subscriber base, retaining Comcast/NBC Universal content is important,” Miller added.
Disney also acknowledged that Hulu will be a crucial part of its streaming strategy. Disney executives are planning to coordinate its services together to offer discounted price as they aim to make their streaming services profitable within the following years.
For Steve Burke, Chief Executive of NCBU, the Disney-Hulu deal is a ‘perfect outcome’. “We believe strongly in the direct-to-consumer space and our content is a key driver of that ecosystem. The extension of the Hulu content-licensing agreement “will generate significant cash flow for us, while giving us maximum flexibility to program and distribute to our own direct-to-consumer platform, as we build that business. Significantly, this transaction also affirms the value of our stake, provides a path to liquidity and ensures our continued equity participation in Hulu’s success,” Burke said.
The Disney-Comcast deal is somehow complicated. While Disney is preparing to launch its own video streaming service Disney+, Comcast is also set to launch its NBCUniversal advertising-supported streaming service. Rest assured, Disney’s plan on Hulu will take their streaming strategic plan into another level.