While “Avengers: Endgame” seems to dominate any and all discussion of Walt Disney (NYSE:DIS) lately, the company’s got other topics of interest to share when it reports earnings on May 8. For many DIS stock holders, there’s another “endgame” that they’re wondering about.

Namely, streaming and what Disney intends to do with its majority stake in the Hulu platform while the team focuses on its yet-to-launch on-demand service Disney+. One option could be to put Hulu on ice for now. Owners of DIS stock probably wouldn’t complain either. Indeed, some observers have suggested Disney should do just that.

But, the case for continuing to cultivate Hulu — and potentially compete with its own on-demand home-grown video service — just got a whole lot better. Hulu added 3.8 million U.S. subscribers last quarter, roughly doubling the 1.74 million domestic members that rival Netflix (NASDAQ:NFLX) added to its roster during the first three months of this year.

Disney stock is up 18.7% since the April 11 Disney+ announcement, while the S&P 500 index has eked out a 1.2% gain in the same three-week period. And, Netflix stock? It’s gained 2.5%.

Netflix still dwarfs Hulu, to be clear. The on-demand video giant boasts a total of 60.2 million U.S. subscribers, and another 88.6 million paying members overseas, where the company doesn’t face a saturation problem. It added 7.86 million international customers last quarter, too. Even with Hulu’s big first quarter, it’s still only got 26.8 million paying members on board. Nevertheless, it’s something to build on, and what makes Hulu different than Netflix could also be what turns it into a boon for Disney and its shareholders.

In fact, that Disney-controlled Hulu shared its subscriber numbers at all speaks volume about how seriously the company wants investors to take it.

Streaming Wars

Though waged for years, the streaming wars have only recently begun to heat up.

Aside from Hulu chasing undisputed leader Netflix, Apple (NASDAQ:AAPL) is entering the game … albeit sideways, mostly leveraging third-party content. Amazon (NASDAQ:AMZN) has been in the fray for a while as well, though it’s still not clear if the e-commerce behemoth is in the streaming game to make money as a streamer, or as a means of selling more merchandise.

Hulu has wiggled its way out of a similar uncertainty, though. It is a for-profit streaming service that makes money by selling ads and selling subscriptions. Others are similar to it, but none are exactly like it.

That doesn’t mean Hulu is profitable for its 60% owner Disney … at least not yet. But, there’s a light at the end of the tunnel.

Number Crunching

Last fiscal year, Disney booked a $580 million loss on equity in streaming investments — mostly Hulu. That was before it got the 30% stake Fox held in Hulu at the time, by virtue of last year’s acquisition of 21st Century Fox. The increasingly smaller consortium also recently bought back the 10% stake AT&T (NYSE:T) owned via its purchase of Time Warner.

If Hulu is still bleeding money, Disney’s two-thirds stake ups the size of the loss that may be holding DIS stock back.

That’s a big “if” though. Last year, Hulu generated $1.5 billion in ad revenue above and beyond sales it raked in through subscriptions. eMarketer expects that figure to reach $1.8 billion this year, and swell to $2.7 billion in 2021.

Pinning down revenue from subscriptions is a tougher matter. Options range from $7.99 per month to as much as $44.99 per month for a so-called “skinny bundle” of cable offerings. Conservatively assuming an average monthly fee of $13 per member, however, Hulu collects on the order of $4 billion per year just from membership fees.

Sales aren’t profits, clearly. But, a swing to real profitability may be in the cards.

Same, But Different

And that’s where Disney’s majority stake in Hulu has the potential, as a business model, to prove disruptive to Netflix.

Both streaming players create their own content as well as rent video content from third-parties. But, Netflix only utilizes — can only utilize — its home-grown shows and movies like The Handmaid’s Tale and The Crown by distributing it through the app. However, Disney — which also owns Fox — and Hulu’s 30% owner Comcast (NASDAQ:CMCSA) have access to a wealth of already-created films and programs that can be readily repurposed on the cheap. Comcast also owns NBCUniversal.

Indeed, Netflix curates content from Disney and NBC, feeding the very beasts it’s fighting.

Following Netflix Playbook

If and when Hulu becomes profitable and can become self-sustaining by pouring profits back into its own growth, look for a more Netflix-like penetration driven by more Netflix-like marketing and more Netflix-like content creation. The consortium will have the option to change its spending plans from one quarter to the next, however.

Netflix doesn’t have that flexibility. It has to spend regularly on new content now that it’s set the bar so high.

In the meantime, owners of DIS stock probably don’t need to worry as much about cannibalization as first feared. The impending Disney+ offering is setting up to be the typical, family-friendly, Disney-branded product. Hulu’s more-mature fare is still marketable under a different brand without damaging the Disney name.

Bottom Line for DIS Stock

DIS stock investors won’t want to hold their breath waiting on Disney to report a gain rather than a loss on its streaming investments. It could still be a while. Disney stock is sitting about 6.5% off its 52-week high.

And, even if Disney+ is well-received, its on-demand direct-to-consumer products aren’t apt to unseat television and hotels as breadwinners. Of the almost $60 billion worth of business Disney drove last year, $24.5 million came from TV, and more than $20 billion came from resorts. (Movies, incredibly enough, aren’t that big of a deal for the company.)

The potential nickels and dimes Hulu could add to the piggy bank aren’t something to dismiss though. If Hulu can prove it can turn a respectable, recurring profit at scale for very little input or added cost, the company may well make a point of creating that scale, even if it’s a multi-year project.

It’s certainly a developing story worth watching.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.