What the Disney Bundle means for Hulu with Live TV

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(Image credit: WhatToWatch.com)

Disney CEO doesn't have to say much to say a lot. He was just a few minutes into the company's third-quarter earnings call when he dropped a bit of a bombshell. Perhaps unsurprising, but a bombshell nonetheless.

Disney Plus will be bundled with ESPN Plus — the streaming arm of the eponymous sports network — and Hulu (opens in new tab) — which continues to grow by leaps and bounds — for a completely reasonable price.

Or, as Iger put it: "In the United States, consumers will be able to subscribe to a bundle of Disney+, ESPN+, and add supported Hulu for $12.99 a month. The bundle will be available on our Nov. 12 launch date"

That's all well and good. In fact, it's more than just well and good. It's damn good. Great, even. For just $2 more than you'd get ESPN Plus and Hulu separately, you'll get everything Disney Plus has to offer. That's, erm, Disney. That's Marvel. That's Star Wars. That's all the new shows and movies all those properties are creating. That's all the old stuff. That's a whole lot of content for not a whole lot of money.

But one fairly big question was lingering. In a world in which we have a lot of pretty good live TV services from which to choose will Hulu With Live TV get any of the Disney Plus love? Or to put it another way: Will there be any sort of bundle discount for live TV alongside Disney Plus?

Iger, doing what CEOs do perhaps better than anything else, answered the question without actually answering the question. It's all about "supporting the businesses as they exist today," he said. They want to make sure the "traditional" and "non-traditional" sides of the video shop "can be resilient."

Disney's CEO was mum about any sort of price breaks on live TV bundled with Disney+.

It also sounded a little like maybe they didn't want to rock the boat any harder than they already have. In fact, he called out one competitor by name.

"On the Hulu Live front", Iger said, "we felt that it was important to do what we can to grow digital MVPD businesses. We obviously know that there are others in the space that have been good partners to us. YouTube would be one to mention."

That's interesting for a couple of reasons. First is that both Hulu and YouTube have live TV services. The second is that YouTube also dabbles — as so many Google ventures tend to do — with its own original content. It certainly hasn't had anywhere near what you'd call must-see-TV success — no The Handmaid's Tale like Hulu, or Stranger Things on Netflix. But it's tried.

That doesn't necessarily mean Hulu has been sitting idly by, however. Christine McCarthy, an executive SVP and CFO for Disney, didn't let the question die without boasting just a bit: "And one more thing on Hulu Live," she added. "The digital platform grew the most of any DMVPD this quarter."

Here's the full exchange from the earnings call:
BOB IGER: We're negotiating with a number of MVPDs right now to extend our linear — or as you call them, live — television channels and these remain important deals to us, and important businesses to us as well. And obviously, that includes ABC and Disney Channel. … So it is important to us to continue to fuel those channels with enough quality, with enough original programming, to support the businesses as they exist today.

We also know that if you look at all the disruption in our business, the business that is being impacted the most is that live, multichannel television product. And so the pivot to direct-to-consumer business is designed to not only address the opportunity that exists in that space but to address the challenge that exists on the traditional side of the business. This means that we have our own balancing act to do in terms of fueling both sides — the traditional side and the new side, or the direct-to-consumer business — with enough quality product to succeed in both places.

Obviously what we also are doing is setting ourselves up in a way in that we can be resilient — probably more resilient than any of our competitors — should the traditional side erode so significantly that it's not as viable as it has been as a business. And that would enable us to pivot pretty quickly, by moving even more product from the traditional channels over to the non-traditional channels.

So it's a balancing act, we believe that we're making enough quality product for both sides right now to feel confident about both sides of the business.

The windowing strategy essentially is we're taking a lot of product that we're making for the traditional channels and ultimately moving it onto the non-traditional. But we're also making original product for the new channels — Disney+ and Hulu — that will not go back onto the other channels, although in some cases it might.

On the Hulu Live front, we felt that it was important to do what we can to grow digital MVPD businesses. We obviously know that there are others in the space that have been good partners to us. YouTube would be one to mention.

We like the fact that Hulu is out there with a product that is very unique in that it gives subscribers an opportunity to buy linear television — digital over-the-top linear television — to buy off-network programming because we know the content licensing deals that they have with the network — and to buy original programming. And that combination of all three puts Hulu in a very unique place in that there's no one out there that's offering a comprehensive television offering the way Hulu is.

Added Christine McCarthy, Senior Executive Vice President and Chief Financial Officer: "And one more thing on Hulu Live — the digital platform grew the most of any DMVPD this quarter."