Can Hulu Integration Help Disney Get Its Magic Back?

Following up on our peek at Netflix’s all time demand trends from late last year, we’re now turning our attention to Disney+. The franchise-focused streaming service deemphasized low-margin subscribers in 2023 in what was a notable strategic shift. This ultimately led to an exodus of paying customers that were largely propping up impressive subscriber numbers but not meaningfully contributing to average revenue per user (ARPU). 

With a smaller overall library than Netflix or Amazon Prime Video, it’s not totally surprising to see Disney+’s average original title demand sit north of an impressive 3.0x for the majority of its still young lifespan even as the service struggles to deliver hits outside of its core intellectual properties.The combination of the pandemic, which forced consumers to stay at home, and the first wave of Marvel Cinematic Universe TV series pushed Disney+ to its most fruitful window of increasing demand across September 2020-September 2021. The service’s average demand even peaked at 4.7x at the tail end of that stretch. 

However, oversaturation, too much reliance on Star Wars and Marvel, and quality concern issues have led to a decline ever since. From that impressive peak, Disney+’s average original title demand has shrunk by 24% as of the end of 2023. Disney leadership has already stated that it will reduce the volume of Marvel output moving forward, while Lucasfilm appears to be playing it overly safe with its recent content decisions. Ideally, executives would like to see more break-out originals along the lines of The Santa Clauses and Percy Jackson to supplement the big franchise fare. 

The ongoing integration of Hulu into Disney+ is meant to supply the streamer with more general entertainment fare that can be sampled by adults without kids, women, older viewers and other demographics that aren’t necessarily Disney’s primary target.

But the real quarry here is a more attractive ad-supported streaming business that can generate revenue while also reigniting subscription growth. If the unified streamer turns out to be a true blue four-quadrant play -- with impressive retention and engagement -- advertisers will get access to Disney’s family-friendly, brand safe empire as well as a more diverse array of target audiences on the periphery.

If a consumer funnel exists between Bluey, Echo and Grey's Anatomy, best believe Disney and its surrounding ad partners will find it.