Fun
Frisky
Nostalgic
Intense
Adventurous
Choked Up
Curious
Romantic
Weird
Hulu is about to get interesting.
In March, Disney completed its $71 billion acquisition of 21st Century Fox that will bring The Simpsons to the upcoming Disney+ service, bring Marvel’s X-Men and Deadpool characters to the MCU, and bring the FX original-programming powerhouse to Hulu. In May, Disney struck a deal with NBCUniversal that will give Disney full ownership and control over Hulu during the next five years.
Meanwhile, Hulu is buzzing like a digital beehive:
- The SVOD service added 3 million new subscribers in the first four months of 2019 and is now growing U.S. subscribers at a faster pace than Netflix. (UPDATE: Per a Hulu spokesperson, 26.8M of the 28M current subscribers are paid subs, while 1.3M are promo/trial subscribers.)
- Disney just inked a deal with Lionsgate that will make FX the cable home and Hulu the streaming home for Lionsgate theatrical releases starting in 2020. That will likely include The Hitman’s Bodyguard sequel starring Ryan Reynolds and Samuel L. Jackson, the next movie in the Saw franchise, and the Keanu Reeves racing drama Rally Car.
- The Little Fires Everywhere miniseries produced by and co-starring Kerry Washington and Reese Witherspoon is in production and barreling toward Hulu’s 2020 originals slate and likely a big Emmy campaign.
- The entire Veronica Mars catalog is joining Hulu on July 1 ahead of the 8-episode fourth season that drops July 26 exclusively on Hulu.
- And Marvel will continue to have a big presence on Hulu with Season 3 of Marvel’s Runaways, two new live-action shows — Ghost Rider and Helstrom — and four new animated shows all in production for 2020.
Hulu has poured millions of dollars into marketing over the last year, partnered with Spotify, Sprint and universities to provide free or low-cost subscriptions to younger consumers, and dropped the price of its ad-supported plan to $6 a month to keep subscription costs down relative to services like Netflix and HBO that are more expensive and don’t have ad-supported options.
The result: Hulu is the SVOD growth story of 2019 and is well-positioned for the streaming wars ahead. As Apple TV+, WarnerMedia’s new service, and Disney+ prepare for fall launches and NBCUniversal plans to launch a new service in early 2020 that will be the future — and likely exclusive — streaming home of the NBCUniversal-owned film and TV, Hulu has been busy building its own case for must-subscribe status.
Will You Pay for Six Services?
As more households ditch cable and spend some of that $100 a month on other services, there will certainly be room for streaming to grow and new services like Apple TV+ and Disney+ for households to sample. A huge factor in streaming’s growth over the next few years will be how much of that $100 a month cordcutters will spend on new streaming subscriptions.
WarnerMedia CEO John Stankey said recently that he foresees a market with five or six dominant streamers. A new survey from Hub Research shows that respondents aged 18-34 already watch film and TV content on an average of 5.5 different outlets, which includes free, ad-supported services like YouTube. I’m deeply skeptical that a critical mass of U.S. households will ever subscribe to five or six paid services.
The idea that we’re entering “a time when people will be paying six or seven different monthly fees, if not more, to keep abreast of pop culture,” as culture writer David Sims wrote recently in The Atlantic, strikes me as outlandish. TV critics want “to keep abreast of pop culture”; normals want to watch whatever’s on Netflix.
One-third of respondents in the Hub Research survey said they’d drop a service they currently subscribe to before adding another one, and one-quarter said they already have too many subscriptions. That reluctance to pay for more partly explains the rise of free, ad-supported services like Tubi, which launched in 2014 and now has 20 million monthly active users.
Hulu's Catalog Is Big and Rich
A lot of factors will weigh into Hulu’s growth — whether Apple TV+ and other new services siphon off subscribers, how long Hulu can hang onto shows from NBC, Discovery and other channels Disney doesn’t own, whether Disney can successfully package Hulu with Disney+ and ESPN+, and whether Hulu has another breakthrough original like The Handmaid’s Tale, etc.
The 2.9 million households who cancelled their satellite or cable service in 2018 and likely more who will do so in 2019 represent a big Hulu growth opportunity. Hulu has next-day programming from ABC, FOX, NBC and Freeform plus its own originals available starting at $6 a month and has a live-TV option with a big on-demand catalog starting at $45.
Hulu will almost certainly see some shows — especially NBCUniversal-owned shows like NBC’s Saturday Night Live and Bravo’s Real Housewives franchises — depart for new platforms, but you can already see Hulu adjusting.
Hulu, which airs next-day episodes for Freeform shows like The Bold Type and Siren, is likely to become a bigger streaming hub for FX over the next few years. Hulu is already the streaming home for FX’s Atlanta, Legion, Better Things, etc., and is currently running next-day episodes of the New York Times news magazine The Weekly that airs on FX.
The fact that Hulu will be one of three Disney streamers along with ESPN+ and Disney+ will also be a major growth opportunity. Disney will likely offer packages that would include two or all three of the services and will have big marketing platforms — theme parks, movie trailers, in-app promotion — to drive awareness that subscribers to one service can easily add the others at a discount.
How Much Bigger Can Hulu Get?
The best current guidance for Hulu’s growth potential is Netflix, which in roughly half of U.S. TV households with 60 million subscribers but is growing more slowly than a year ago. The company expects to add only 100,000 U.S. subscribers a month in the second quarter of 2019. “Netflix appears to be nearing its peak U.S. subscriber point,” consulting firm PWC wrote in early June.
Hulu, meanwhile, added an average of 750,000 subscribers a month the first four months of 2019 and is now in a sweet spot with 28 million U.S. subscribers where it will have a big head start on new services but still has plenty of room to grow.
Hulu also has a range of price points and plans — from $6 a month for the ad-supported catalog on up to $51 a month for the top-tier plan with live TV and the ad-free catalog — and has effectively segmented its marketing accordingly. A May promo for ad-free Hulu starring the Old Spice guy had nearly 60 million YouTube views in the first month, and an early June promo for Hulu as a destination for watching live sports had 20 million YouTube views in the first two weeks.
Morgan Stanley media analyst Benjamin Swinburne projects that Hulu will reach 36 million U.S. subscriptions in 2020 and 53 million in 2024. That’s at the high end of Disney’s own projection of 40-60 million Hulu subscribers in 2024 and reflects an optimism that Hulu has the originals, the price points, the reach, and the tech to be one of the big winners in the streaming wars.
Scott Porch writes about the TV business for Decider and is a contributing writer for Playboy. You can follow him on Twitter @ScottPorch.
