When the owners of Hulu -- Walt Disney Co., 21st Century Fox and Comcast Corp. -- opted not to sell the online video site, Disney Chief Executive Bob Iger said, “Hulu has emerged as one of the most consumer friendly, technologically innovative viewing platforms in the digital era.”
If that’s the case, then why is Netflix getting a potentially big-ticket Disney property instead of Hulu?
In announcing that it struck a deal with Netflix for four new series based on Marvel Entertainment characters, Disney not only bypassed its broadcast and cable properties, but also the online streaming service that is struggling to compete with Netflix.
To be sure, Netflix has deeper pockets than Hulu. This package of shows will probably cost Netflix several hundred million in license fees.
But the owners of Hulu said just last summer that they would invest almost $1 billion to make it more competitive with Netflix and Amazon. What better way to do that than put on compelling original content aimed at young viewers?
By going with Netflix, Disney is reducing risk. Netflix gives it cash, and Disney makes a show. If it works, they all win, and if it doesn’t, only Netflix takes a bath. If Hulu gets the show and it flops, then Disney and Hulu lose.
On the other hand, if the show works on Hulu and brings it more subscribers, then Disney wins twice. It is a risk, but if one is in the business of asset building, then risks must be taken. And wasn’t the purpose of buying Marvel to feed the Disney platforms?
Bypassing Hulu once again sends the message that the site will play second fiddle to other interests of its corporate owners. This is, of course, why the owners initially decided to sell Hulu in the first place.
After the Hulu sale was called off, media analyst BTIG media analyst Rich Greenfield said it was a smart move.
“We think the worst thing they could have done is selling to a distributor, making a distributor stronger or increasing a distributor’s leverage,” Greenfield said.
Maybe. Or maybe the owners decided they didn’t need to sell Hulu to make a rival stronger.
Follow Joe Flint on Twitter @JBFlint.