What Will Happen Now That Disney Basically Owns Hulu?

Rhett Jones 12/16/2017. 20 comments
Murders And Executions Disney Fox Hulu Netflix Streaming Cord-cutting Acquisition Murdoch Iger

Walt Disney Co. has agreed to buy the bulk of 21st Century Fox’s holdings in a $52.4 billion deal. While the changing future of the Marvel Universe and the movie landscape, in general, is big news, this deal also changes the entire calculus of streaming services. Disney is now the proud majority owner of Hulu, and the soon to be overlord of premium streaming.

Disney is currently leaving the toxic but profitable Fox News assets to the Murdoch cabal, and snapping up pretty much everything else under the Fox roof. That includes the National Geographic networks, the X-Men film franchise, and The Simpsons. But Disney is also getting a bigger piece of the pie in properties that it was already involved with. Along with Fox, NBCUniversal, and Time Warner, Disney has been a partner in Hulu from the beginning.

Hulu started off as a way for the big media companies to get a piece of the streaming pie and stave off Netflix’s domination of the market. Now that Disney is taking over Fox’s 30 percent stake in Hulu, it’ll have a controlling share of the company and it can fully weaponize the service against Netflix. While this deal gives Amazon less negotiating power in the future, Netflix is the one that’ll be hit hardest.

Back in August, Disney announced that it was pulling its titles from Netflix when the contract expires in 2019 and that it would be launching its own streaming service. As far as driving competition goes, it was good news that there’d be a new player in streaming. But now, two out of the four major services people will choose from in the near future will be owned by the Mouse. According to TechCrunch, Disney CEO Bob Iger shareholders on a conference call that “managing Hulu becomes just a little bit more clear, a little more efficient, a little more effective as a controlling shareholder.” That’s one way to put it. Another way is that Disney has a lot more power to tell its partners what to do.

In 2019, Disney will not only have veto power over its partners at Hulu, it’ll also be better positioned to argue with NBCUniversal about giving any of its content to Netflix. Disney will also, of course, be able to withhold all of 21st Century Fox’s properties from Netflix.

Right now, Iger is telling shareholders that Disney intends to keep the two services distinct. Hulu will be for more adult-oriented shows and movies, while Disney’s service will be for family-oriented content. “I don’t think you should necessarily look at it as individual businesses, but I think you should look at it as opportunities in consumer choice, and consumer options,” reportedly told shareholders. No problem Bob, I will not think of it as individual businesses; I’ll think of it as Disney having a huge amount of muscle in streaming and one business will make all the money.

Media consolidation is the way of the modern world. We’re clearly headed towards some sort of AllCorp Inc. and Disney is in a great position to be the big winner. It already owns a ton of companies, and according to Bloomberg, 40 percent of the 2016 box office was dominated by Fox and Disney. This could have plenty of repercussions for movie theaters as well. Disney has already shown that it’s willing to strong-arm the struggling cinema industry by making unprecedented demands from theaters that want to show the new Star Wars. Barton Crockett, a media analyst at B. Riley FBR, told Bloomberg “Disney is becoming the Walmart of Hollywood: huge and dominant.”

None of this will come as a surprise to Netflix. That’s why its long-term strategy has shifted to focus on original content. The company plans to spend $8 billion on its own films and series in 2018, with a target of 50 percent of its content being original over the next few years. Of course, it could hit that 50 percent goal sooner than expected if studios pull their content before Netflix is ready. This direction is good news for people who want more of Netflix’s fine content. But we’re clearly exiting the era when a huge library of diverse films and shows on a single inexpensive service was just considered the norm. Soon, you’ll have a few services with a specific niche, and you’ll pay Amazon and Apple to buy the individual flicks that you can’t stream. With the torrenting world slowly shrinking, and media companies getting better at targeting piracy, we’ll probably look back at the last decade as the golden age of entertainment options.

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