The cost of staying in the streaming wars is climbing.
Disney just revealed that it expects to lose more than $250 million in 2018 (up from $100 million the previous year), according to The Wrap. Disney owns a 33 percent stake in Hulu (increasing to 66 percent with the Fox deal), so the overall amount is probably closer to $800 million. A spokesman for Disney attributed these losses to content licensing costs.
Obviously, content is the engine that drives streaming services, and competition from Netflix and Amazon will only push these costs higher. Such dollar amounts might seem terrifying to you or I, but they don’t appear to bother Disney’s CEO, Bob Iger, who related that Hulu is, “ramping up their volume.” He cited The Handmaid’s Tale as an example of the type of content they’re pursuing.
Related – Hulu Will Not Morph Into Disney’s Streaming Service
Media Futurist, Rich Greenfield, indicates that other extenuating factors will actually drive Hulu’s 2018 total losses to $1.6 billion — a large figure any way you slice it.
Disney $DIS on Q1 call says their 30% share of Hulu losses in fiscal September 2018 will rise 112% — yields all-in @Hulu losses of nearly $1.6 billion 👀 👇 pic.twitter.com/fePkLSNCNS
— Rich Greenfield, LightShed 🔦 (@RichLightShed) February 7, 2018
As dire as this sounds for Hulu, it’s really just the costs of playing in the streaming sandbox. Netflix has been running billion dollar deficits for quite some time, and they’re far from slowing down. Amazon’s Jeff Bezos, now officially the planet’s richest human, has been splurging on licensing for Lord of the Rings and now Conan too.
Where does it all end? There are only a finite number of potential subscribers out there, and Disney will soon parachute onto this battlefield, armed with Marvel, Pixar, Lucasfilm, and their own Disney-branded animated vault. At some point the billions of dollars in shared losses in this conflict must tip, but somebody’s going to blink far sooner… and Hulu is looking like the most likely candidate.
Who do you think will be the first major casualty of the streaming wars? Let us know in the comments down below!
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SOURCE: The Wrap
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