The big question inside Disney: What’s going to happen to Hulu?

Disney is on a mission to make Disney+ its one-stop shop in streaming, prompting some employees to wonder: Where does that leave Hulu?

Nine Disney streaming staffers tell Business Insider that it’s become impossible to ignore the company’s increasing emphasis on Disney+ over Hulu.

“Internally, the Hulu brand isn’t a priority,” an employee on the ads side of Disney’s streaming business said.

The Mouse House has been steering bundle subscribers to the Disney+ app by loading it with most Hulu movies and shows and some ESPN content. Unbundled Disney subscribers can also watch some Hulu and ESPN shows free of charge on Disney+. But Disney+ content isn’t available on Hulu.

Disney CEO Bob Iger said in May that these changes are “definitely having a positive impact” on the streamer’s engagement and cancellation rate.

Disney is also making changes internally. It’s discouraging Hulu-only ad buys and merging the platforms’ ad servers, employees said.

Two sales-side employees said they need special permission to sell a Hulu-only ad spot, excluding certain interactive ads that only work on Hulu. They said the sales team is pushing advertisers instead to buy across both Disney+ and Hulu, as part of what one of the staffers called a “massive” companywide push “to prioritize Disney+ over everything.”

And last week, Disney moved to a unified ad server for Disney+ and Hulu. This shift, known internally as “Mission Control,” was labor-intensive and at times painful but necessary, the employees said.

“Everything going through one ad server makes a lot less work for everyone involved when it comes to getting ad campaigns live,” the first ads employee said.

Disney’s changes show the Hulu brand is now decidedly on the back burner, this person said. They viewed the shift as mostly positive and said further unification of Disney+ and Hulu would give consumers a better experience while simplifying the ad sales process.

Hulu fans’ migration to Disney+ is off to a slow start, so far.

Two Disney streaming employees with access to viewer data said the overwhelming majority of Hulu viewership still comes directly from the Hulu app, not through Disney+. Hulu has centered its identity on dramas and comedies for adults and next-day TV.

Disney is seeing some progress, though: One Hulu-focused streaming employee said the “Hulu on Disney+” section has been starting to get more engagement as subscribers start to discover that they can use Disney+ as an all-in-one app.

However, the Hulu-focused employee, who’s familiar with the service’s analytics, said many Hulu subscribers don’t pay for Disney+ and aren’t necessarily interested in its family-friendly content dominated by franchises like Marvel, Star Wars, and Disney animation.

Several media analysts support Disney’s direction, though, in going all in on Disney+.

Further integrating Hulu into Disney+ could save the company about $3 billion through “the elimination of duplicative technology and administrative costs,” MoffettNathanson’s Robert Fishman said in a mid-July note.

UBS media analyst John Hodulik told BI in July that Disney fully consolidating Hulu into Disney+ is “one of the steps they need to take to Netflix-ify their streaming business.”

Disney didn’t respond to requests for comment.

Impacts on Hulu’s business

Although Hulu still gets most of its viewership from its stand-alone app, there are signs Disney’s emphasis on Disney+ could be affecting its ad business.

According to analysts at MoffettNathanson, Hulu generated the most US ad revenue of any paid streaming service in the second quarter, thanks to its mature ads business, which launched in 2008.

However, Hulu’s ad revenue fell an estimated 0.3% last quarter, MoffettNathanson said. Hulu was the lone paid streaming service that didn’t grow ad revenue in the second quarter, according to the firm. Meanwhile, Disney+ saw its advertising revenue soar 67% year-over-year in that same span, MoffettNathanson said.

Despite that, Disney+ has a long way to go to catch up. Hulu’s ad revenue was more than four times that of Disney+ last quarter, MoffettNathanson said.

“Hulu having slightly lower ad revenue year-over-year while Disney+ has seen a huge increase makes perfect sense to me,” the first employee on the ad sales side said, considering the company’s continued emphasis on Disney+ over Hulu.

Another Disney+ employee said that “eyeballs are shifting into the Disney+ interface,” in line with what one of their Hulu-focused colleagues said.

Both Disney+ and Hulu have seen gradual subscriber growth, even though Disney hiked prices of each service’s ad and ad-free tiers last October.

Hulu is well ahead of Disney+ in how much money it makes per subscriber in the US. Hulu brought in $12.36 per subscriber in the first three months of this year, while Disney+ only generated two-thirds of that sum. But Hulu’s average revenue per subscriber has fallen in each of the last three quarters, while Disney+’s has steadily risen.

Life after Hulu?

The idea of shuttering the stand-alone Hulu service has been raised internally as a thought experiment, an employee on the business side of Disney’s streaming division who had been involved in those discussions said.

“Every time we go through that in our long-range plan, these things come up,” this person said. “You’re looking at, ‘Alright, what would happen if we did this? Could we cut this? Could we merge? What would happen?’ So you do those analyses in the background, but not all of them ever come to see the light of day.”

A longtime Hulu employee said that Disney’s focus with streaming has been on a “unified platform.” They added that Hulu’s tech had “serious degradation” issues and could feel outdated, given that it’s one of the oldest streaming services.

Still, one potential issue with shutting down Hulu as a stand-alone app is that it’s emotionally intertwined with the brand for staffers, sometimes called “Hulugans.”

“Old employees have an affinity for it,” a second veteran Hulu employee said.

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