Is Hulu the FAST That Disney’s Looking For, Right Under Its Nose? (Wolk)

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There are many things Bob Iger needs to do now that he is back in charge of Disney, but one of the most pressing ones is to get the company a FAST (free ad-supported streaming TV) service.

Disney is the only major broadcast network without one.

Paramount has the very popular Pluto TV. NBCU has Peacock’s free tier. FOX has Tubi. And while Warner Bros. Discovery is not a broadcast network, it is a major media company, and its CEO David Zaslav has stated that it too is looking to launch a FAST.

It’s not that Disney desperately needs a FAST for the U.S. market (though it wouldn’t hurt). The main purpose of launching a FAST would be to help Disney gain market share overseas, in all those emerging economies where most people don’t have much disposable income, let alone disposable income that can be used towards a subscription TV service.

Disney has been lucky thus far—the Hotstar service it owns in India (Disney inherited it from Fox) has been wildly successful, controlling around 80% of the Indian market despite Netflix’s and Amazon’s best efforts to change that.

In addition to having rights – at least up until now – to Indian Premier League Cricket, Hotstar has a free (FAST) version and the paid versions that are considerably cheaper than Netflix and Amazon (less than 50 cents for one of the more popular plans).

Still, it is the availability of a FAST version that makes Hotstar so attractive to millions of people who mostly watch on mobile.

Fortunately for Disney, they have a ready-made option should they want to launch a FAST: Hulu.

Disney has been trying to figure out what to do with Hulu for some time. While it was originally positioned as the “adult” (read: non-kids) streaming service within the Disney Bundle, the line between Hulu and Disney Plus has grown increasingly blurry as the latter has introduced more “adult” content.

Hulu is also home to Disney’s virtual pay TV service (vMVPD), Hulu + Live TV, and the vMVPD market has been growing over the past few years – Hulu + Live TV now has around 4.4 million subscribers, up 400,000 from last year, which is particularly notable given that non-virtual MVPDs are shedding subscribers left and right.

Hulu + Live TV is a solid business, one that is likely to expand over the next few years as a nicotine patch of sorts for those looking to give up traditional cable. Better still, it can easily be combined with a Hulu-based FAST that allows Disney to surface its massive library while providing advertisers with a way to reach all those viewers they’ve been missing on traditional linear.

Whether it’s a bolt-on for Hulu + Live TV or a standalone product, a Huly FAST would be a win for Disney. It gives them a way to increase the overall amount of ad inventory the conglomerate has on offer, which then lets it limit the amount of ads it runs against their original series.

What’s ironic about this scenario is that Hulu started off life as a pure-play FAST.

When the service was launched, it was positioned as a way for all of the broadcast networks to get their shows up on streaming, sort of an MVPD VOD alternative with better navigation, and the initial offering included a subscription version and a free version, both ad-supported.

While those days are long gone (and it’s likely that only a few of us TV nerds even remember them) the benefits for running Hulu as a FAST remain.

To begin with, there’s the flywheel effect. That’s something Paramount has used Pluto TV for with great effect, teasing out shows that run on its subscription service Paramount Plus, via both promos and via a few “here’s a small taste” episodes intended to get the viewer hooked.

Disney can use a Hulu FAST to promote shows on Disney Plus and ESPN Plus plus any of their new theatrical releases, using the aforementioned tactics and/or running “behind the scenes” and “a talk with the director” type shows.

The flywheel also works to keep viewers abreast of what new shows the network’s subscription services have on offer and to promote new seasons of said shows, especially to viewers who are churning through the paid versions of its services. By giving them a free option, Disney can make sure they stay in the promotional loop. 

The additional ad inventory also gives Disney a wider audience to sell against. An ad buy against a combined Hulu FAST/Disney Plus/ESPN Plus audience would be a great thing for many advertisers, especially big budget TV advertisers looking to reach as wide an audience as possible with an image ad campaign. It would allow the library programming on Hulu’s FAST to serve as a reach extension counterpart to more premium buys against original programming on both subscription Hulu and Disney Plus.

A Hulu FAST would not detract from subscription Hulu and its original programming. If anything it would be a net positive as it would allow Disney to promote prior seasons of hit shows like A Handmaid’s Tale while drumming up interest in current season originals.

Disney also has a number of other lines of business: theme parks, cruises and a whole lot of themed merchandise that can be promoted via a Hulu FAST, while gathering valuable data about their viewers and their likes and dislikes.

Finally, a Hulu FAST would put Disney in a great position for overseas expansion, providing it with a way into all of those countries where subscription services will not prove popular but where the population knows and loves Disney and will be happy to watch ads in exchange for the ability to watch Disney shows and movies.

Something for Mr. Iger to seriously think about as he attempts to steer the company back into profitability.

Alan Wolk

Alan Wolk is the co-founder and lead analyst for media consultancy TV[R]EV