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An agreement to have Disney (NYSE: DIS) take control AT & Tof (NYSE: T) The 10% stake in the Hulu streaming service makes sense for both parties. In fact, it seems almost inevitable.
Here's why the deal is in preparation and what it could mean for AT & T and – perhaps more importantly – for Disney.
Source of the image: Getty Images.
How we got here
Hulu started as a joint venture to compete Netflix (NASDAQ: NFLX) while providing a streaming home for content created by Hulu's founding studios, including Disney. Hulu had some advantages over Netflix, such as the fact that subscribers could view episodes of current season broadcasts (Netflix tends to broadcast whole seasons at once after the end of the year) .
Until recently, three companies – Disney, Comcast (NASDAQ: CMCSA)and Twenty-First Century Fox – each held a 30% stake in Hulu, and one company – WarnerMedia – held the remaining 10%. WarnerMedia was then engulfed by AT & T and Disney acquired the vast majority of Twenty-First Century Fox as part of a massive merger deal. So, Hulu is now under majority control of Disney, whether the Disney-AT & T case under discussion is concluded or not.
At the same time, Netflix's initial content strategy propelled the concept of streaming integration into the studios – arguably one of Hulu's pioneers, since it belonged to Producer studios content – at a higher level. Netflix has been very aggressive in creating its own content in its own studios for its own streaming services, and other companies are following suit. While Netflix is focusing more on its own studios, studio companies are focusing on creating new streaming services, including Disney and AT & T.
Where is AT & T?
For AT & T, the decision to go out of Hulu could be pretty easy. AT & T does not want to allocate the content it owns through WarnerMedia to a streaming service in which it holds only 10% of the capital. And she has a better option: her own streaming service WarnerMedia, which should be launched in 2019.
If AT & T wishes, Disney seems to be the only logical buyer since Comcast has launched a streaming service, also less ambitious than its counterparts, and could well plan a strategy for Hulu exit, although CEO Steve Burke has says no. It's easy to imagine that Disney will soon have 100% Hulu.
Where is Disney
With the acquisition of Twenty-First Century Fox's assets, Disney will control Hulu's future. It makes sense that Disney wants to have 100% streaming, because this kind of integration between streaming and studio services can reduce expenses and increase profits. But Disney's Twenty-First Century Fox contract was largely concluded to set the stage for a different streaming service, Disney +.
With its combined Disney and Fox studio wallet, Disney has a lot of content for Disney + to start properly. But the Disney-Disney deal has also given Disney Hulu, and having two streaming services is not really effective. It seems like Disney wants to propel its biggest hits on Disney +, and it 's not as though many other studios were eager to help Disney strengthen Hulu' s content offering. .
But Disney seems determined to make the two work together, and is trying to position Hulu as an adult-only service, while Disney + is targeting a younger population. It remains to be seen if it will work. Hulu offers a streaming service on live television, which Disney + apparently does not have; but this live television live broadcast service has a relatively small number of subscribers.
The future of Hulu and the dilemma of Disney
Here, it's easy to understand the logic for both parties: everyone wants to own the entire home studio streaming supply chain in order to maintain their operations as efficiently as possible. What will be interesting to see, is how Disney juggles with its additional streaming service. If Disney + is a success, balancing one's portfolio may not matter. But if efficiency is the name of the game, it's fair to wonder how Disney could try to reuse Hulu. At least, Disney will not have to worry about anyone using Hulu's infrastructure to compete with Disney +; Disney will do it to himself.
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