Finally: Disney, Hulu Deal Announced
Took ' em long enough. — After weeks of rumor and speculation Walt Disney Co. (DIS) has finally taken a stake in Hulu, the video streaming site operated by NBC Universal, News Corporation and Providence Equity Partners.
Context & Ripple Effects
The announcement closes out weeks of speculation that Silicon Alley Insider had already flagged at the end of March, when word first surfaced that the Disney-Hulu deal was done. Hulu began life as a News Corp.-NBC Universal venture with Providence Equity Partners as financial backer, and its March viewing data showed more videos streamed even as unique visitors dipped — audience momentum that made a third network partner look less like an option than an inevitability.
Two signals from the run-up frame what Disney is buying into: advertisers have stayed leery of Hulu despite its surging viewership, and reporting in March indicated News Corp. and NBC were pulling back from the venture. Disney's capital therefore lands at the moment the founding partners' own commitment is under question, which cuts both ways — fresh validation, or a rescue.
First-order effects
- ABC programming now sits alongside the NBC and Fox catalogs on Hulu, giving advertisers a three-network pool of current-season premium inventory in one ad-supported place.
Second-order effects
- Apple's iTunes pay-per-episode model faces a stronger free-with-ads alternative for current-season TV, especially with Hulu's iPhone and iPod touch app expected within months — putting Disney content on Apple devices outside the iTunes purchase flow.
- Ad-supported portals competing for studio content, YouTube chief among them, face renewed pressure to lock up network partnerships before the premium-TV ad market hardens around Hulu.
Third-order effects
- If broadcasters keep distributing through jointly owned platforms rather than building their own destinations, control of online TV economics migrates to whoever aggregates the rights holders — the networks collectively, not any single portal.
- Whether advertiser hesitancy over online video gets resolved will decide if such ventures become primary ad vehicles for the networks or stay experimental line items; Disney's stake raises the stakes on that measurement question.
The trend: Broadcast networks are pooling premium content into co-owned, ad-supported streaming platforms rather than ceding online distribution to third-party portals.