Disney (NYSE:DIS) recently signed a deal with Hulu to produce four animated series from its Marvel Studios.
The adult series will be based on Marvel television characters — Hit-Monkey, Tigra and Dazzler, Howard the Duck and Mental Organism Designed Only for Killing (M.O.D.O.K). Apart from individual series, all the four characters will feature together in an animated special, The Offenders.
Notably, Hulu already streams Marvel’s live-action TV show called Runaways.
Strong Content Lineup Aids Hulu
Disney is looking to cash in on the popularity of Marvel characters by producing content centered on them for Hulu and Disney+. Disney is working on a TV series based on Marvel Cinematic Universe characters including Loki and Scarlet Witch for its streaming service.
Notably, Marvel Studios, which has a popular film slate and TV shows, recorded worldwide box office collectionsof approximately $17.6 billion in 2018.
We believe that the current deal is a result of Disney’s efforts to add more content to Hulu’s platform and take the service international after it acquires majority stake in the service. Notably, Disney, which currently holds 30% stake in Hulu, is entitled to another 30% stake after it acquires Twenty-First Century Fox (NASDAQ:FOXA) in the first half of calendar year 2019. Comcast (NASDAQ:CMCSA) owns 30% stake in Hulu and AT & T the remaining 10%.
Disney’s move to add more licensed content to Hulu is in the right direction as 89% of Hulu subscriber’s first watched licensed programming before watching original content, per 7Park Data. The move is expected to boost subscriber base and ad dollars. Hulu added 8 million U.S. subscribers, up 48% year over year, bringing the total count to 25 million in 2018. Ad revenues surged 45% year over year to $1.5 billion in 2018.
Moreover, with Hulu’s price cut of its basic ad-supported plan and Disney’s discount for all streaming services – ESPN+, Disney+ and Hulu at one go, is likely to attract users. Netflix (NASDAQ:NFLX) recently hiked its subscription in the range of 13% to 18% for U.S. customers.
The Walt Disney Company Revenue (TTM)
The Walt Disney Company Revenue (TTM) | The Walt Disney Company Quote
Can Disney Beat its Competitors?
Hulu’s competition with Netflix is further heating up as Hulu advanced the release date of documentary Fyre Fraud before Netflix’s release of Fyre. Hulu, which first planned to release the documentary as a series released it as a film just four days before Netflix’s release and the documentary has been the number one film on Hulu’s platform since then, per Variety.
Apart from Netflix, Disney and Hulu are expected to face stiff competition from Amazon (NASDAQ:AMZN) , which is expected to have the highest number of subscribers after Netflix, per a report from Vindicia. Moreover, Amazon’s push into live sports will place it in direct competition with Disney’s ESPN+ offerings, an area where both the companies are investing heavily. Further, with already 200 over-the-top (OTT) services available in the United States alone, competition in the space is reaching new heights.
Nevertheless, we believe that Disney+’s strong content lineup along with Hulu’s solid performance is expected to help the company quickly attract subscribers in the fast-growing streaming market. The market is expected to reach $21 billion by 2020, per Vindicia.
Disney currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
The Walt Disney Company (DIS): Free Stock Analysis Report
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report
Original post
Zacks Investment Research