Is the Disney+, Hulu and Max bundle the key to end Netflix’s dominance?

The recently launched Disney-Max bundle offers massive scale and helps the two legacy companies put up a stronger front against Netflix than they could individually. Disney+, Hulu and Max combined have more than double the audience demand versus Netflix’s current industry-leading catalog. According to Parrot Analytics, one of the bundle’s main advantages is combining three very different platforms that cater to varied audiences. Just over 7% of titles are shared across Max, Hulu, or Disney+, underscoring the uniqueness of each catalog. As of Q2 2024 (Disney’s Q3 2024), 2.3% can be found in both Hulu and Disney, 4.9% are shared between Hulu and Max, and none between Disney+ and Max.

The combined platform will largely consist of content previously unavailable on the other platforms. Hulu, the largest TV catalog of the three, will provide 43.2% of the new platform’s catalog, while Max’s shows would account for 36.6% and Disney+, the smallest of them, only 13.0%. This small overlap means that there will be little to no cannibalization between the platforms involved, greatly expanding the viewing options for subscribers who switch from one of the platforms to the new service. However, the overlap between consumers who already subscribe to all three platforms is unknown.

While demand for original content drives subscription growth, library content is key for customer retention, one of the most important streaming goals for Disney and WBD. The three platforms combined have more than double the U.S. audience demand compared to Netflix, which has been able to pull away from the competition in recent years largely due to its massive scale.

Corporate demand share assesses the long-term viability of the top media companies as they look to consolidate their original content’s availability exclusively onto their own platforms, and can effectively help value a conglomerate’s legacy and library content in aggregate. Disney and WBD have been the top two media conglomerates in corporate demand share since April 2022, when WBD debuted. Disney has historically boasted the largest slice of this pie chart. These two companies alone account for 35.3% of the demand for all TV content with US audiences as of Q2 2024 (Disney’s Q3).

WBD’s most straightforward path to leapfrogging Disney in this category is to join forces with a competitor. With Paramount spoken for, a combination with NBCUniversal would put the new entity well ahead of Disney in Corporate Demand Share.

Warner Bros. Discovery CEO David Zaslav effectively put all options on the table for his company earlier this month. Comcast may be the best positioned company to acquire WBD, or spin off NBCU to merge with WBD as a separate entity. This hypothetical marriage of convenience makes sense from a scale perspective. It would surpass Disney as the top media company by corporate demand share. WBD’s lack of a broadcast network makes this more palatable to regulators regardless of who is running the FTC in 2025.

The fate of Comcast's Streamsaver bundle, combining Peacock, Netflix, and Apple TV+, is a significant factor in any merger analysis. If Comcast acquires ownership in both the Disney-Max bundle and Streamsaver, it could potentially redefine the entire streaming landscape through a comprehensive re-bundling strategy. Zaslav views himself as a peer to Comcast CEO Brian Roberts, making the executive structure of a future company a delicate matter. Roberts has made high profile bids for Disney and Fox in the past, so another similar attempt would be in character.

Franchise IP has driven the fortunes of both Disney and WBD for decades. It is the engine behind the famous and elusive flywheels industry analysts are always squawking about. However, Disney’s Star Wars and Marvel are in various states of decline. Disney+ is seeing diminishing returns for its high profile Star Wars live action series. The average season one global demand for the three most recent releases has dropped 17.3% compared to the first three, with the peak demand down 13.4%. With steadily rising production costs, this lower return on audience demand should be a red flag for Disney. When it comes to movies, there will end up being a seven year gap between Star Wars releases. Meanwhile, declining box office receipts for Marvel movies that aren’t led by Ryan Reynolds have reshaped the public perception of this once untouchable arm of the Disney Empire.

For WBD, HBO’s “House of the Dragon” has been the number one show worldwide across all platforms since its season two debut. It has also boosted demand for “Game of Thrones,” the world’s third most in-demand series across all platforms over the same time. This is welcome news for the Max platform, which has been dogged by plateauing subscriber growth. WBD’s DC Universe is in the early stages of a rebrand, with “The Penguin” coming to Max in September as an early test run and James Gunn’s full reboot kicking off in earnest with 2025’s “Superman.” WBD’s most valuable and respected brand is HBO, which it removed from its flagship streamer’s name last year, but seems to be reversing course in 2024. Several would be Max Originals from the DC, “Harry Potter,” and “It” franchises are now set to become HBO linear debuts.

The key question for both companies — and all major players who want to compete in the 2020s and beyond — is how to best leverage audience demand for beloved franchise IP. Selling nostalgia to millennials works for now, but how sustainable is it long term? The next iteration of blockbuster entertainment requires a careful calculus of creative talent and insights into audience behaviors.