Star launch means a lot of new content for Disney Plus – but not in the US

Today marks the launch of Star. This is a new section of Disney Plus aimed at international audiences that will feature more mature R-rated movies, TV shows from FX, and other shows and movies that Disney owns the rights to but do not match. Disney Plus family image.

Star is effectively Disney’s solution to the fact that Hulu does not exist in international markets. This allows the company to extend the Disney Plus value proposition to international customers with the most crucial currency a streaming service can offer: a larger library of content.

This means international users are poised to get a massive influx of movies and shows available on Disney Plus, via Star, which won’t be available to US customers – or rather, won’t be available to customers. Americans via Disney Plus. . Instead, those shows and movies will continue to live on Hulu as part of the separate service.

Photo: Twentieth Century Fox

If you are an international Disney Plus customer residing in the United Kingdom, Ireland, France, Germany, Italy, Spain, Austria, Switzerland, Portugal, Belgium, Luxembourg, the Netherlands, Norway, Sweden, Denmark, Finland, Iceland, Australia, New Zealand or Canada – the regions that will have access to Star from today – that’s great news.

Conversely, if you are an American customer, you may feel a little cheated. The library that Disney offers on Star includes TV shows like Family Guy, how I Met Your Mother, Lost, Firefly, Grey’s Anatomy, Desperate housewives, Buffy the Vampire Slayer, and Bones, with movies like Deadpool 2, Kingsman: Secret Service, Borat, and Brave Heart – Movies and shows for which Disney already owns the rights, but requires customers to pay an additional Hulu subscription to watch in the United States.

This is due to a complex matrix of rights transactions and income streams. While Star and Hulu will have a fair amount of overlap – including the Hulu originals like Love, Victor – Hulu in the US still has a much larger library, including shows and movies licensed from third-party studios such as MGM and Paramount.

Star, on the other hand, will only offer first-party content to which Disney has the rights from its own studios (which include ABC, Hulu, FX, Freeform, 20th Television, 20th Century Studios, and Touchstone Pictures). It appears Disney’s track record has come to the conclusion that subscribers are willing to pay for the separate Hulu and Disney Plus libraries in the US, but the more limited Star lineup was enough to justify a standalone paid purchase for customers. international.

Part of that distinction also comes down to the Angry God of ARPU (Average Revenue Per User) – something Disney is very concerned about as it seeks to expand Disney Plus around the world. Turning to Disney’s 2020 profits, the company’s direct-to-consumer streaming business grew 73% year-over-year, with revenue of $ 3.5 billion. But it did less each customer’s money on average, with an ARPU dropping to $ 4.03 per subscriber, largely due to the significantly lower cost of Disney Plus Hotstar in India and Indonesia.

(Star, by the way, is not to be confused with Disney Plus Hotstar, which operates under the Disney Plus banner and features the original Disney shows and films, but is a very different service in terms of price and distribution from Disney Plus. / Hulu in the US and Disney Plus / Star in other international markets.)

Turning Star into a cheaper international version of Hulu doesn’t help solve this ARPU problem. But using Hulu content to boost Disney Plus subscribers in the most lucrative (per customer) markets of Europe, Australia and Canada does.

It is especially true once you factor in that Disney is also using the Star Rollout to increase prices in these markets from € 6.99 per month to € 8.99, which marks a proportionately larger increase than the increase price of $ 1 ($ 6.99 to $ 7.99) slated for Disney Plus users in the United States later this year.

And using that big pile of Star content to sweeten the pot is the perfect answer for Disney, because it already owns the rights to it all. Unlike Hulu, which costs Disney a ton in licensing costs and ad revenue deals, adding Star to Disney Plus internationally doesn’t cost it a dime. It’s just better to monetize the things the business already owns.

This is even reflected in the brand itself: Last year CEO Bob Chapek announced he would use the Star brand internationally instead of Hulu, citing both the fact that Hulu has the association of aggregate content as well as its lack of brand awareness outside of the United States.

In fact, Star’s existence could be a glimpse into a possible future for Disney’s streaming efforts in the United States, should Hulu become unsustainable as stakeholders continue to reclaim their licensed shows and movies for their own. own streaming services like Peacock, Paramount Plus, or HBO Max.

If Disney plans to offer a single unified streaming service in the United States, there is still some way to go. For now, US customers will have to fork over for the Disney package (which includes Disney Plus, Hulu, and ESPN Plus) if they want to stream FX shows. and WandaVision.

But whether you live in the United States with Hulu or in Canada with Star, there is one big winner in all of this: the Disney results.