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Why The Walt Disney Company (DIS)’s Investment in Hulu Won’t Hurt Netflix, Inc. (NFLX)

The Walt Disney Company (DIS)With The Walt Disney Company (NYSE:DIS) participating in a fresh $750 million investment in Hulu, Netflix, Inc. (NASDAQ:NFLX) shareholders might be wondering if the House of Mouse will loosen ties with the streaming king. Hulu and Netflix are longtime rivals, after all.

Yet a parting of the ways is unlikely, says Fool contributor Tim Beyers in the following video. Why? Netflix and Disney already have an exclusive deal for films in 2016 and beyond. Until then, both Netflix, Inc. (NASDAQ:NFLX) and, Inc. (NASDAQ:AMZN) have access to The Walt Disney Company (NYSE:DIS) via fare through arrangements with Epix, a Viacom, Inc. (NASDAQ:VIAB) service that grants access to films distributed by Paramount Pictures no earlier than 90 days after release.

If there’s a reason for investors to be fearful, Tim says, it’s not the investment in Hulu but Disney’s buyback of Paramount’s distribution rights to Marvel Studios films Iron Man, Iron Man 2, Thor, and Captain America: The First Avenger. Epix and its customers should no longer have streaming access to those films.

Fortunately, that’s entirely the case. Both, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) were streaming Thor and Captain America, as well as Marvel’s The Avengers, as of this video. Iron Man and Iron Man 2 must either be rented or purchased, Tim says.

Meanwhile, just like Star Wars, Marvel films screened between now and the end of 2015 — and that includes Avengers 2 — are unlikely to show up at Netflix, Inc. (NASDAQ:NFLX) or Amazon. The Walt Disney Company (NYSE:DIS)’s investment in Hulu isn’t a factor. Instead, the company, now free of its ties to Paramount, will need only to honor its agreement with Starz (NASDAQ:STRZA).

Now it’s your turn to weigh in. Do you care about Disney’s investment in Hulu? Does knowing there will be a gap in Netflix’s Marvel coverage matter in your investment thesis for the stock? Please watch the following video to get Tim’s full take, and then leave a comment to let us know what you think.

The article Why Disney’s Investment in Hulu Won’t Hurt Netflix originally appeared on and is written by Tim Beyers.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), Netflix, Inc. (NASDAQ:NFLX), Time Warner Inc (NYSE:TWX), and The Walt Disney Company (NYSE:DIS) at the time of publication. He was also long Jan. 2014 $50 Netflix call options. Check out Tim’s Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader. The Motley Fool recommends and owns shares of, Apple, Google, Netflix, and Walt Disney.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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