Disney+ Parental Controls Could Seal Hulu’s (Eventual) Fate

At face value, Disney+ housing Netflix’s previous Marvel series may not seem like a big deal. After all, Disney+ is already home to nearly every other piece of Marvel content (save some Hulk- and Spider-Man-related content), so it makes sense from a consumer standpoint to access as much of those shows and movies under one roof as possible.

However, the bigger deal to Disney+ adding the likes of Daredevil, Luke Cage, The Punisher and other Netflix series is the parental controls that come with them. While Marvel and Star Wars movies have plenty of violence already, they’re still movies and shows largely made for a PG-13 audience, with language and violence that reflects that sort of rating.

The Neflix shows, on the other hand, could be seen as R-rated content beyond what was previously available on Disney+. So by ushering in those series, Disney+ takes some initial steps toward shedding its family-friendly public veneer, while in effect laying the groundwork for Hulu’s eventual fate.

How so? Since Disney+ was introduced less than three years ago, it seemed that the “Disney bundle” separation was a neat one for the company and consumers. Big IP and family-friendly content goes to hero service Disney+, adult and FX fare go to Hulu, and sports head to ESPN+.

Bringing the Netflix shows and eventually something like Deadpool (R-rated but Marvel as well) starts blurring those lines and creates the need for parental controls. Former Disney Chairman and CEO Bob Iger’s statement in late 2021 that Disney+ needs “more content for more people” further scrutinizes the approach going forward. How do you create more content for more people while effectively pigeonholing the service into family-friendly or IP-heavy content? At some point, there’s little growth left, unless you start building a bigger tent. And if you build a bigger tent at Disney+, what’s the point of the smaller one at Hulu if it’s not all that fundamentally different?

Iger may not be pulling the strings at Disney anymore (and we’d be remiss not to mention the new and old pressures coming at current Disney CEO Bob Chapek from all sides as we speak), but his words still carry weight and truth to them inside the House of Mouse.

Disney, ultimately, is the biggest brand name of the three services and the one the company can and should be most invested in hoisting up. It’s already bigger than Hulu by a factor of about 3x subscribers. And if we’re seeing the eventual Discovery+/HBO Max mega service as a harbinger of what’s to come, then it stands to reason that Disney would eventually make the same consideration to put everything under one roof.

Where things get trickier, though, is that there’s already significant overlap in subscribers between the three services given the nature of the existing bundle. And even more pressing for Disney, they still don’t own Hulu in its entirety.

Comcast holds its 33% stake until at least 2024. Last year, the conglomerate even mentioned holding onto the service longer — which, as we discussed in this space, made a lot of sense so they could have their hands in two large ad-supported streamers. Now, would Disney do anything in the coming years to make sure that Hulu is no longer a large ad-supported service anymore?

While ad-supported Hulu on-demand could be completely undercut by the forthcoming ad-supported Disney+ tier, there’s no way around the ad dollars Hulu + Live TV is worth unless you completely kill it off in favor of a copycat service within Disney+. Would turning Disney+ into a vMVPD muddy the waters and even diminish the value of the service or Disney brand in the big scheme? I could see that happening. But such a move would potentially force Comcast’s hand to get out of Disney’s streaming coffers, especially since Comcast is already guaranteed no less than $27.5 billion in the sale of its third of Hulu.

As a result, I’m inclined to think that Disney would consider going through with it. As Hulu’s been deemphasized over the years (thanks in part to this Comcast arrangement that incentivized Disney tamping down Hulu’s value), Disney+ has become a force internationally as Star and Disney+ Hotstar have driven it into new markets. Those services also provide the foundation for an all-encompassing Disney+ that could include live TV, ESPN+, current Hulu VOD content and the array of Disney+ programming as well.

This would be a big swing for Disney, but they do seem to be setting up how it could eventually happen. That doesn’t mean Hulu’s gone by 2024, but by the end of this decade? It seems highly likely.