Did you know Hulu lost $1B in 2017 and is expected to lose even more in 2018?
That would be a bone crusher for most other public companies, but it’s not effecting Hulu’s outlook according to the attached Motley Fool article.
To understand why that is you first need to know how they’re spending their money. In 2017 Hulu spent $2.5B on content, which is about 30% of what Netflix spends, but they have about 100M fewer subscribers than Netflix to help offset the cost.
Most of the $2.5B is going to content providers like Disney, Fox, Comcast, and Time Warner. These companies also happen to own the majority of Hulu, so any money exiting the back door as expense is coming in the front doors of Hulu’s true landlords. Nice setup if you can get it, eh?
Even the largest content costs are pretty much revenue neutral, so the losses don’t matter. In the meantime Hulu’s subscriber base and market value continue to grow, making it a more valuable acquisition target. And I’ll give you one guess as to who will cash in when (not if) Hulu is eventually acquired.