Disney+ and Hulu are set to merge into a single streaming app experience as the former has been suffering from a continued decline in viewership across the globe.
The move comes after Disney+ lost four million subscribers in the first quarter of the year, accounting for an 8% dip in its subscriber base, according to an earnings release by the Walt Disney Company.
A decline in viewership in India was identified as a primary factor in this significant loss.
Disney+Hotstar, which caters to viewers in India and Southeast Asia, lost 4.6 million paid viewers during the period, bringing down its subscriber base to 52.9 million.
Disney Merges With Hulu to Take More Reserved Approach to Content Curation
According to Disney CEO Bob Iger, the merger signals a shift towards a more reserved approach to content curation.
The company plans to become “much more surgical about what it is we make” and “look to reduce content spend” in a bid to streamline its operations and reduce costs.
“We realized that we made a lot of content that is not necessarily driving sub growth,” said Iger, adding that the company plans to remove certain content from its streaming platforms.
The company expects to take an impairment charge of between $1.5 to $1.8 billion as a result.
HuDis? DisLu? HuNey+?
Disney+ and Hulu will be merging by the end of 2023 for a new combined app experience.
However, expect less. While the app will provide opportunities for advertisers, Disney will be removing content across both platforms to make room for the merger. pic.twitter.com/ikLnek9T70
— ENDAVO (@endavomedia) May 23, 2023
The merger of Disney+ and Hulu reflects a larger conflict in Disney’s business model as the company seeks to remain profitable in the digital age.
For one, the company is again considering the “Disney Vault” approach of quickly ending windows of rereleases for classic movies, which was once a hallmark of the company’s business model, as it works to raise its value compared to other major streaming services.
Despite the decline in Disney+’s subscriber base, the company’s streaming services still have a robust total of over 231.3 million subscribers.
It remains to be seen whether the merger of Disney+ and Hulu will attract new users to the streaming app or entice former subscribers to return. The company anticipates profitability for its streaming business by the end of the 2024 fiscal year.
In the meantime, Disney+ plans to raise its prices even further. The ad-free streaming tier will cost more than $11 per month, while the ad-supported tier will cost over $8 per month.
Netflix Continues to Lead as its Ad-Supported Streaming Tier Finds Momentum
While Netflix has experienced a decline in market share over the past few years due to the emergence of new players, the company is still dominating the streaming market.
In the first quarter of the year, Netflix maintained its position as the leading streaming platform in the US with a market share of 44.21%.
— A2XULA ️ (@A2XULA) April 18, 2023
The company has also seen some notable success with its recently-launched ad-supported streaming tier, which was conceived to attract a greater number of customers and offers a more accessible pricing option as competition within the streaming market continues to increase.
Last month, Netflix disclosed that its ad-supported streaming tier, launched last November, has reached nearly five million monthly active users.
The basic ad-supported plan is currently priced at $7 per month and represents a reduced-cost alternative to Netflix’s standard offerings that start at $10 per month.
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