1. Disney’s Looking To Make Hulu Go All Mouse
CNBC’s Alex Sherman broke a hot story this week with reports that negotiations were well under way for Disney to buy out Comcast’s 30% share of Hulu, which would give them 100% of Hulu, as Hulu itself recently bought back AT&T’s 10% share.
Why It Matters
Hulu is hot right now. After years of floundering, they’ve finally figured out a working business model along with the right pitch for consumers. Hulu has more library content than Netflix, much of it current season episodes of network TV shows, the sort of thing that might not sound as sexy to reporters as Umbrella Academy, but likely draws in far more viewers.
Then there’s their real superstar, Hulu Live TV. The vMVPD service has already kicked DirecTV Now out of the #2 slot for vMVPDs, adding about 2MM viewers last year according to Bloomberg. I’ve been a customer for over a year now and I’m a huge fan of the service, which has a beautiful and intuitive interface.
If you’re the company that owns ESPN and ABC, having a live TV service is a huge plus.
Especially a live TV service that you can include as part of a bundle with your three premium SVOD services (Disney+, ESPN+ and now Hulu.)
The other piece of the puzzle for Disney is to figure out how to position Hulu against Disney Plus. It would seem that there are a few ways to go– as an “everything” service, with the deepest library in SVOD, from the most sources, or as their more adult-oriented premium network, with HBO-like originals. (They can also market it as both–all the “comfort food TV” you want, plus hot new originals.) It’s not something to solve in a Week In Review article, but it shouldn’t be all that hard to figure out.
What You Need To Do About It
If you’re Comcast, you don’t have many options. You don’t have the cash to buy out Disney, which would be the baller move. You could wait to see if the value of Hulu rises, so you could sell your share for more, but let’s be real: you’d wind up fighting with Disney too much for the price to really skyrocket. Best to get out while you can.
If you’re Disney you just need to figure out where Hulu and (especially) Hulu Live TV fit into your future plans (EPSN + RSNs???) and what the resulting bundles look like.
If you’re everyone else, just be glad it’s now a two-company race.
At the very least.
2. Verizon Wants To Put YouTube TV In Every House
If there was a bad decision to make, former Verizon CEO Lowell MacAdam made it. From OnCue to Go90 to Oath, Verizon’s content deals were disasters and such head-scratchers that many wondered if he wasn’t some sort of secret genius, seeing things we mere mortals had missed. (He wasn’t.)
So it’s no wonder that Verizon’s current leadership is a bit gun-shy about any sort of content play and is happy to outsource it, announcing this week that they were going to expand their deal with YouTube TV to all their broadband subscribers and would likely be offering some sort of broadband/vMVPD bundle too.
Why It Matters
Their FIOS service was once the gold standard, but maintaining a sold pay TV product and interface isn’t in Verizon’s wheelhouse, whereas making sure that product is delivered without a hitch is.
It’s curious that they’ve hitched their wagon to YouTube, the most digitally-oriented of all the vMVPD providers, though then again, maybe it’s not—both companies are lead by engineers who look at the world through binary code lenses and so there’s likely a natural bond there. (There’s also the fact that most all the other vMVPDs are owned by someone Verizon might rightly call a competitor.)
Other than providing a direct contrast to AT&T, whose Direct TV and DirecTV Now services both took mega hits this week, reporting sizable subscriber losses, which in its way proves out the wisdom of Verizon’s decision, the YouTube deal points out how crazy it is that other MVPDs haven’t launched their own vMVPD services.
Now there are likely some legal reasons for that, contracts that would need to be altered, etc., but it’s more likely that the MVPDs were afraid that launching their own vMVPDs would cannibalize their own businesses.
A fair enough point, but better to lose customers to one of your own divisions than to lose them to another company entirely. And given the current state of MVPD TV, we’re expecting to see a lot more defections over the next few years.
What You Need To Do About It
If you’re Xandr or Freewheel, figure out how to stop Google from getting all that user data from Verizon.
If you’re Hulu, Fubo or Sony, see if you can strike a deal with Verizon too. It’s a good move for them—they can offer viewers a choice of vMVPD services, and a good deal for you—bundles mean extra customers. And once Hulu is all-Disney, they won’t be considered part of the competiton (Comcast.)
If you’re a consumer, it’s worth checking out. While FIOS TV isn’t awful, it’s nowhere near as functional as a vMVPD and the price for FIOS + YouTube TV is likely to be a whole lot less than what you are paying now.