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Tuesday, February 12, 2019

Why Are People Baffled by Disney’s Streaming Strategy?

by Ray Keating
February 12, 2019

Why do some people seem so perplexed by Disney’s online streaming strategy? It’s actually perplexing that they’re so perplexed.

The Walt Disney Company always has been careful about its brand. And considering that the company has been successful for nearly a century now, and has grown into an international, entertainment goliath, their strategy apparently has worked pretty well.

As Disney now goes all in on streaming, they’re going with three services. ESPN+ is for sports. Disney+, due to go live later this year, will be the streaming service for the main Disney brand, if you will, which will be largely family friendly. That doesn’t mean it will be kids’ stuff, just that it, for the most part, will not venture into the realm of R-rated material. 

And then there’s the fact that Disney will own 60 percent of Hulu once the Fox deal is completed, and the company has made it known that it’s open to a deal with AT&T and Comcast to acquire the rest of Hulu. As DisneyBizJournal.com has noted before, it looks like Hulu will be home for Disney’s R or more R-like fare. 

This strategy seemed to be confirmed with Disney’s recent announcement that Hulu would be home to four new adult-oriented Marvel animated shows – Howard the Duck, M.O.D.O.K, Hit-Monkey, and Tigra and Dazzler.  For good measure, it has been reported by TheWrapthat Hulu is interested in the recently-canceled Marvel shows on Netflix, like “Daredevil” and “Luke Cage.” (This doesn’t surprise DisneyBizJournal.com as noted in our piecefrom November 2018.)

But there are those perplexed folks. For example, Wired’sPeter Rubin penned a piece titled “Disney’s Building Its own Streamer – Why Take Shows to Hulu?” Rubin says that this is “a little weird,” and “that Disney, which owns Marvel, is continuing its shattershot [scattershot?] approach to television adaptations of its comic-book characters.” Rubin added, “But Disney also lost more than $500 million on Hulu last fiscal year, making the choice to create content for that platform rather than Disney+ a head-scratcher.” And later Rubin asks, “Why would it continue to develop shows for networks and platforms it doesn't own outright?” And finally, he argues, while quoting some analysts, that people will be confused by this Disney strategy and won’t buy Disney+.

This “analysis” would be amusing if it weren’t from a notable source like Wired. First, as we’ve already touched on, there’s nothing ad hoc or confusing about Disney’s streaming strategy. It’s actually pretty straightforward. Rubin seems particularly baffled about maintaining a certain Disney brand. Second, creating more content isn’t scattershot, given that a key point of Disney being able to go it alone in the streaming universe is its enormous IP library. Third, since Disney will soon own the majority, controlling interest in Hulu, and perhaps in fact owning Hulu outright at some point soon, why wouldn’t they make investments in the service to make it profitable? 

While we’ll learn more in April when Disney reveals more about its Disney+ plans at an investors day, the company’s streaming strategy is pretty clear. The only real question is: Will Disney be able to get subscribers to sign up for Disney+ and Hulu? That would be even more of a question if Disney was not making the investments that it clearly is in both services.

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels, with the three latest books being Reagan Country: A Pastor Stephen Grant NovelHeroes and Villains: A Pastor Stephen Grant Short Storyand Shifting Sands: A Pastor Stephen Grant Short Story. He can be contacted at raykeating@keatingreports.com.

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