Launched 8 years ago, Hulu’s subscription service is an
over-the-top streaming service that is jointly owned by Disney (30%), Comcast
(30%), Fox (30%), and AT&T/Time Warner (10%). Hulu offers subscribers the ability to stream
television programming owned by its joint venture partners, as well as content
created by Hulu and other content providers.
The basic Hulu package costs $7.99 per month with limited commercials
and $11.99 with no commercials. Hulu
Live which was launched in 2016 provides live streaming of 50 broadcast and
cable channels. For additional fees,
subscribers can add on HBO, Showtime, and Cinemax to any of Hulu’s offerings.
Disney and Comcast are in a bidding war to acquire some of
Fox assets, including the 30% ownership in Hulu. Whoever wins will become the majority owner
of Hulu with a 60% ownership stake. Interestingly,
both firms have hinted that they are willing to sell off the Hulu assets to
gain regulatory approval of the deal.
Why?
· -- With higher costs to acquire and now create
original content, Hulu lost nearly $1.8 billion in the past three years and is
expected to lose close to that in 2018.
· -- Both Disney (using BAMTech) and Comcast (Xfinity
Instant TV) are investing tremendous amount of resources to go Direct-to-Consumer
(DCS) on their own. Is Hulu more of a substitute
rather than a complement to these services?
· -- Is Hulu near the end of its useful life in a television
programming market that is becoming increasingly fragmented?
Not so fast! Why
should Comcast or Disney fight to keep its stake in Hulu?
· -- As of the end of 2017, Hulu had 17 million
subscribers. It is the second largest
SVOD after Netflix. That critical mass
of subscribers gives leverage in negotiating partnership deals (like the one
with Spotify in April).
· -- Hulu’s service bundled with the winning bidder’s
DCS could be very attractive to customers.
· -- Who would buy the take in Hulu? AT&T?
Facebook? CBS?
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