Hulu is about to raise the price of its live TV service by $5 per month, but try to soften the blow by bundling in two premium streaming services – Disney+ and ESPN+.

Hulu alerted Hulu + Live TV customers today of the price increase, which takes effect December 21.

Figure 1: Bundling has been commonplace for Disney in the streaming era. Prior to a move to combine Hulu + Live TV with Disney+ and ESPN+, Disney has been offering a discounted bundle of the Hulu SVoD service with Disney+ and ESPN+.
(Image source: The Walt Disney Company)

Hulu + Live TV already includes the Hulu subscription VoD service. Under the new structure that will bundle Disney+ and ESPN+ along with the $5 increase, Hulu + Live TV will sell for $69.99 per month with the ad-supported Hulu SVoD service, and $75.99 per month with the ad-free version of the Hulu SVoD service.

Forcing a subscriber jolt

Disney is obviously looking for a way to jolt streaming subscriber growth across the board as it ties services together across Hulu's pay-TV base of about 4 million.

Disney+ added a disappointing 2.1 million subs in the company's fiscal Q4 due in part to production slowdowns that have caused the flow of new originals to slow. Meanwhile, Hulu's live TV service added 300,000 subs in the period, while ESPN+ tacked on 2.2 million.

The bundling strategy does add value as Hulu raises the price of its live TV offering, but, strategically, it will enable Disney to expand the reach of its full complement of direct-to-consumer (DTC) services. On the other hand, bundling them all together could cut into the average revenue per unit (ARPU) for Disney+ and ESPN+, which sell monthly for $7.99 and $6.99, respectively, on a standalone basis.

Prior to the new offer with live TV, Disney has also been marketing a bundle of Disney+, ESPN+ and the Hulu SVoD service starting at $13.99 per month (with Hulu ad-supported), and $19.99 per month (with Hulu with no ads).

The move with Hulu + Live TV could end up being a mixed bag for Disney. While some customers will be happy to have Disney+ and ESPN+ included, the bundle does make the service a bit more complicated. And it's possible that some Hulu + Live TV subs won't like having Disney+ and ESPN+ foisted upon them, perhaps causing some to explore other options.

But Richard Greenfield, analyst with LightShed Partners, believes it's a smart move overall, noting that it will ultimately help to keep churn in check after the NFL season and provide Hulu with a differentiator in a crowded virtual multichannel video programming distributor (vMVPD) market.

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— Jeff Baumgartner, Senior Editor, Light Reading