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Struggling in calculus memes9/2/2023 Selling Hulu 'would be foolish,' bulls argue ![]() Meanwhile, others are convinced that Disney has no choice other than betting on streaming - even if it's costly. Some analysts now think it's no longer a no-brainer for Disney to take on Netflix by acquiring all of Hulu, especially since such a deal would add to the company's sizable debt burden. After 2022's struggles, Netflix's subscriber base of 232.5 million is rising again, as is its stock, which is up 51% this year. The streaming pioneer is profitable, has a massive content library, and boasts unrivaled scale since it has lower content acquisition costs on a per-user basis. While Disney's streaming business finds its footing, Netflix is getting even stronger. That sparked concerns about saturation that have since persisted.ĭisney and its peers responded by prioritizing profits over subscriber growth, raising prices and bidding on fewer new shows, moves that please Wall Street but risk hurting growth further. The canary in the coal mine was Netflix, which shocked investors when it lost subscribers last April for the first time since 2011. ![]() "As streaming has kind of fallen down in the last year, that whole thesis has come under question and attack."Įventually, consumers signed up for streamers at a slower rate as pandemic stay-at-home orders ended - it was a brutal awakening for media firms that had shelled out billions for content. "The original philosophy was, 'Aggregate as much content as possible,'" Joe Bonner, a Disney analyst at Argus Research, told Insider. As a result, media companies ruthlessly competed for both libraries of intellectual property and original scripted content to win over new customers and keep existing ones happy. In streaming's early days, most investors ignored losses and focused only on subscriber growth. ![]() Content costs have soared, and revenue is unreliable since customers can easily cancel after binge-watching a show. Streaming is a massive money-loser for every media company besides Netflix, including Disney. Hulu would likely continue to live on as a standalone service.īut ever since Wall Street lost patience with unprofitable businesses in 2022, the question isn't whether Disney could compete with Netflix in streaming but whether it's even worth trying to. Comcast is now trying to drive up that price, contending that Disney hurt Hulu's value by not launching it in foreign markets.īy buying all of Hulu, Disney could integrate its content into Disney+, which would make the flagship Disney streamer a formidable challenger to Netflix. Rival Comcast has the remaining one-third stake, and the two companies made an agreement in 2019 that allows Disney to acquire Hulu early next year for a minimum of roughly $9 billion. Disney faces a fork in the road as streaming growth slowsĭisney already operates and is the majority owner of Hulu. A clear consensus emerged, though that's not to say Iger's decision will be easy. Insider spoke with several analysts in recent weeks to get their take on how Disney should handle Hulu. What Iger does with Hulu will have outsize impact on his own legacy as well as Disney's long-term trajectory, its streaming competitors, and Hollywood's creative stakeholders. However, Iger hinted earlier this year that the streaming service wasn't a must-have by calling its content "undifferentiated." Iger has since changed his tune on Hulu, so observers once again expect Disney to buy Comcast's 33% share of the streamer and integrate it into the Mouse House's broader streaming strategy. ![]() Nearly seven months into Iger's second ride as CEO, Disney shares have barely budged, and investors are waiting for his verdict about key assets at a crossroads, including Hulu.ĭisney has long seemed destined to acquire Hulu in full and fold it into Disney+. When Bob Iger made a dramatic return to Disney last fall, he risked his legacy to revive the company's floundering stock price and make crucial strategic decisions about its future. Here's what Wall Street thinks Iger will do about Hulu and whether he'll make a mistake.Going all-in on streaming was once a no-brainer, but analysts are no longer sure it's Disney's best bet.Disney CEO Bob Iger must decide whether to acquire all of Hulu and fold it into Disney+.Account icon An icon in the shape of a person's head and shoulders.
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