21 Sep

Changing Streaming Landscape Spells Trouble for Hulu

WRITTEN BY Puja Tayal

The online streaming landscape was once owned by a few companies, each of which offered a different type of content. Netflix (NFLX) offered original content like “Stranger Things” and popular TV shows like “Friends” and “The Office.” Hulu largely offered old TV shows like “Family Guy” and “30 Rock” and current primetime shows.

The streaming landscape then and now

Four entertainment companies, Disney (DIS), AT&T’s (T) WarnerMedia, 21st Century Fox, and Comcast’s (CMCSA) NBCUniversal, jointly owned Hulu. They were not interested in entering the streaming market. Hence, they used Hulu as a platform to put their shows online. This arrangement worked well for both Hulu and partner entertainment companies.

However, the streaming landscape is changing. Entertainment companies are looking to enter the streaming space themselves to monetize their rich library of content. Disney is launching its own streaming service called Disney+ in November. NBCUniversal is launching Peacock and WarnerMedia is launching HBO Max in April 2020.

An article from The Verge noted that these changes spell trouble for Hulu. Hulu relies largely on entertainment companies for content. However, media companies are removing their popular content from the licensing market to run that content on their own streaming services. For instance, Netflix lost “The Office” to NBCUniversal and “Friends” to Warner Media. These shows will be available on their respective developers’ streaming platforms Peacock and HBO Max from April 2020.

Content licensing gets complicated

Licensing content will get a little messy in this new landscape. The Verge reporter Julia Alexander explained the licensing problem with the help of Hulu. Hulu offers live TV services. Viewers can watch NBCUniversal’s “Saturday Night Live” on Hulu in less than 12 hours after it has aired. Now that NBCUniversal is launching its own streaming service, “Saturday Night Live” will stream on both Hulu and Peacock until its licensing deal with Hulu expires. However, older seasons of the show will only be available on one streaming service. We believe that streaming service will most likely be Peacock.

Other than live TV services, Hulu also offers popular TV programs from other media companies. Julia Alexander explained how content licensing gets complicated in this case. She explained it with an example of “This is Us,” a program developed by NBCUniversal and streamed on Hulu.

Hulu needs a makeover

Back in May, NBCUniversal parent Comcast sold its 30% stake in Hulu to Disney. At that time, they agreed that Hulu will continue to stream NBCUniversal shows for the next five years. Shows like “This is Us” will stream on both Hulu and Peacock, but the episodes will be split among the two. Episodes released after the deal will be available on Peacock and those released before the deal will be available on Hulu.

The complications in licensing show that Hulu can no longer survive with its old model of streaming third-party content. It needs its own library of original content that goes beyond its home production “The Handmaid’s Tale.” Netflix, Apple TV+, and HBO are all producing original content exclusively for their streaming service.

Disney’s streaming plans for Hulu

This year, Disney acquired 21st Century Fox’s 30%, Comcast’s 30%, and AT&T’s 10% stake in Hulu. Disney has full control of Hulu. Also, the company is launching its own streaming service Disney+ in November. What does Disney plan to do with Hulu?

Disney bought Hulu for its wide subscriber base. Disney plans to divide its content, keeping family-friendly content for Disney+ and shifting more adult content to Hulu. This means Disney, Pixar, Marvel, Star Wars, and National Geographic content will be available on Disney+. More adult content like “American Horror Story” from Disney’s recently acquired 21st Century Fox’s assets will be available on Hulu. Also, Disney will use Fox to create more original content for Hulu. It will also produce four adult animated series from its Marvel Studios for Hulu.

Disney streaming bundles are the most cost-effective

In early August, media reports stated that Disney will bundle its upcoming streaming service Disney+ with ESPN+ and Hulu. The bundled pack will be available for $12.99 per month from November 12. This will cost ~$5 less than individual subscriptions of Disney+, ESPN+, and Hulu — $6.99, $4.99, and $5.99 per month — which adds up to around $18. Disney’s bundle pack will cost the same as Netflix’s most popular standard plan.

In a press release dated May 14, Disney CEO Robert Allen Iger said he wants to” leverage the full power of The Walt Disney Company’s brands and creative engines to make the service [Hulu] even more compelling and a greater value for consumers.”

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