Tubi Defeats Disney+
It’s official! Disney+ has now fallen behind Tubi. The little service that could has climbed over the multi-billion dollar zombie that is Bob Iger’s legacy. The dream of his career as CEO was to make Disney’s content digital. Well, he’s done it and nobody wants it. His solution is to merge Hulu with Disney+ and then kill Hulu completely.
Brilliant.
Iger doesn’t have a clue why Hulu worked in the first place because his head is fundamentally wrapped around a Boomer’s view of digital entertainment. So far as he’s concerned it’s the new Blockbuster Video and he owns the store.
Bob Iger is a cunning boardroom brawler. No mistake about that. Don’t believe me? Ask Ike Perlmutter, Nelson Peltz, and Bob Chapek. That said, he is an abject failure as a corporate strategist. Brian Roberts the CEO of Comcast Universal has run rings around him. Iger’s dream for Disney+ is how Roberts was able to lay a trap for him with Hulu as the bait.
Back in 2007 Netflix’s bread and butter wasn’t tentpole movies, it was offering an entire TV series as binging fodder. This started with the early cord-cutters when Netflix was strictly a DVD-by-mail service. The pattern wasn’t noticed at the time, except by Netflix.
When Hulu was launched a year after Netflix started streaming, it offered the one thing Netflix couldn’t, instant reruns. Missed last night’s episode of 30 Rock and don’t have Tivo? Hulu’s got your back fam, you’ll have to deal with commercials but unlike Netflix, the service is completely free. This very simple plan of ‘do what the other guy isn’t doing’ was the key to Hulu’s success.*
The pity of it is that Hulu isn’t doing that anymore. Warner decided Hulu CEO Jason Kilar was more of a genius than he really was and made him CEO of Warner which he proceeded to run into the ground. Nonetheless hiring Kilar obligated Warner to pull out of Hulu, which they wanted to do anyway in order to create the money pit that was HBOmax.
Rupert Murdoch decided to prove he was the smartest guy in the room by auctioning off 20th Century Fox.
Brian Roberts proved he was the second smartest by (1) bidding up Fox’s sales price to twice what it was worth, permanently crippling Disney. (2) And then getting Bob Iger to write an iron-clad put-option on Universal/Comcast’s remaining stake in Hulu in exchange for going silent and giving up the rights to Marvel heroes that Universal had never made money on anyway.
When it was first released into the internet wilds Hulu had the perfect marketing plan. It was the anti-Netflix. Back when Disney, Warner, Fox, and NBC/Universal had a stake in it, Hulu could do what Netflix couldn’t.* But what can it do now?
I think rolling Hulu into Disney+ was always Iger’s desired end state. But he just can’t see what it has inevitably turned into. Roberts could, which is why he now has billions in Mickey Bucks to build amusement parks that will leave Disney’s broken-down relics in the dust.
Once Universal pulls its content and it’s doing so already, Hulu/Disney+ is going to be Netflix lite.
Tubi on the other hand looked at what Netflix and Hulu weren’t doing and did that instead. Want something from the 50s like The Burns and Allen Show, Tubi’s got that. Into Pro-wrestling? Tubi is still doing that. Just want some background noise from a decade that ain’t this one? No trouble at all. Farscape, Babylon 5, Van Helsing, Dresden Files it all there. Are you a weirdo blogger who likes British sci-fi from the sixties and seventies? You’re embarrassing but you’re ours. The important thing is that Murdoch spent the money where it mattered. The search engine. Plug in a title and if Tubi doesn’t have it will deliver something in that neighborhood and truth be told something in that neighborhood is going to be good enough for the Tubi viewer. It was also very friendly to independents who couldn’t get on streaming anywhere. For a while, it was the only place you could legally stream Bone Tomahawk and Death of Stalin.
In four years it’s gone from a startup worth $400 million to a market cap of $2 billion and is now moving into original content but not breaking the bank doing it. This was done with the very small part of the $72 billion that Iger paid for 20th Century Fox.
While Hulu is currently in the black the guy that put it there is Kevin Mayar and he’s been gone long enough that I expect the inertia will shortly run out. Regardless, even if it continues to show the profit it’s currently making. There is no way in hell it will ever cover the grand total of $100 billion the Hulu/Fox purchase will have cost Disney.
*In case you are wondering, “Hulu” is Mandarin for gourd. You can blame Jason Kilar for that one.
