‘Squid Game’ Isn’t for Disney, and That’s a Problem
(Bloomberg Opinion) -- Disney+ could never play “Squid Game.”
By now, many viewers have probably heard of Netflix Inc.’s creepy series out of South Korea, which has become a streaming sensation in recent weeks. A “dystopian survival story kind of like ‘Hunger Games,’” is how Netflix’s co-chief executive officer, Ted Sarandos, described “Squid Game,” but even that’s sanitizing the plot. “Ultra-disturbing” better encapsulates it, and yet the series is a must-watch. When Sarandos referred to “Squid Game” during a technology conference Sept. 27, it had been out only nine days and was quickly capturing Netflix subscribers’ curiosity — and possibly their nightmares later. At one point, the program held a 100% rating on Rotten Tomatoes. “‘Squid Game’ will definitely be our biggest non-English-language show in the world, for sure,” he said. “And it’s a very good chance it’s going to be our biggest show ever.”
Without giving too much away, “Squid Game” is about a large group of contestants competing in a seriously twisted version of childhood games such as “Red Light, Green Light” to win money. It’s exactly the kind of mature content that could never appear on Walt Disney Co.’s Disney+, which unlike Netflix is committed entirely to programming that’s safe for children and family viewing. But that mission is also frustratingly misaligned with Disney’s other goal: to be the leader in streaming TV. For now, Disney relegates programming for adults to the Hulu app, and it’s hard to win the streaming wars with such an unnecessarily complex set of offerings. “Squid Game” is precisely why the company needs to rectify this by finally uniting Disney+ and Hulu as a single service and investing more in adult-friendly content. Until it does, it won’t be able to break the bond Netflix has forged with viewers.
While customers can subscribe to Hulu as part of a $14-a-month bundle that includes Disney+ and ESPN+, they remain separate apps. That creates a barrier to entry for the viewer and knocks down one for the competition. Hulu’s creative potential has also been held back over the years, first by having an unhelpful hodgepodge of ownership, and now by existing as an afterthought at a company where Disney+, Marvel, Pixar and “Star Wars” take priority. That said, Comcast Corp. retains a stake in Hulu, complicating Disney’s next move. With Hulu recently turning profitable and becoming a more strategically important asset, the cost to buy out Comcast is rising daily. And if the situation weren’t messy enough, Kelly Campbell, the president of Hulu for almost two years, just resigned abruptly and reportedly may take a job at Comcast NBCUniversal’s rival streaming business, Peacock.
It isn’t as easy as just slapping the two brands together. For starters, Hulu makes money from advertising, which Disney+ is forgoing for now. Incorporating ads is an enticing but tricky proposition for streaming companies as Netflix continues to spoil viewers by not having any. Parents also greatly appreciate the lengths to which Disney goes to shield children from inappropriate programming, although simple parental controls would probably do. It’s just not reasonable to expect every household to pay an increasing fee for a service that doesn’t have something to entertain or amuse parents — such as “Squid Game” or “The White Lotus” on HBO Max or “Mythic Quest” on Apple TV+.
Disney+ had 116 million subscribers as of July 3, while Hulu had about 43 million across its different packages; Netflix had 209 million. Investors have been concerned that either company may have trouble growing its base much from here — or holding on to users tempted by the impressive programming on the other services lately.
Simplifying its offering could help Disney take the grown-ups away from Netflix.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.
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