Losses for Hulu have more than quadrupled from the first half of 2015 to the first half of this year as the streaming service burns through cash in an attempt to keep up in an original content arms race.
According to figures posted by BTIG Analyst Richard Greenfield, Hulu lost $353 million in the first half of 2017. That figure was nearly five times the company’s loss of $72 million in the first half of 2015, and approaching double its loss of $195 million in the first half of 2016.
The losses come as Hulu ramps up its investment in original content amid increased competition from the likes of Netflix and other streaming players.
Hulu investor Comcast reported in a recent SEC filing that Hulu’s losses were “driven by higher programming and marketing costs.” That’s because, as Hulu’s head of original programming Beatrice Springborn put it in an interview with The Hollywood Reporter earlier this summer, Hulu is “absolutely spending on par with Amazon as far as content development goes.”
The push for more content investment has been a standard line from Hulu competitor Netflix in recent years. In its most recent second quarter note to shareholders, the company points out major tech companies like Amazon have joined the throngs of SVOD players and TV networks “in bidding for great content,” resulting in a high pressure market.
“Creating a TV network is now as easy as creating an app, and investment is pouring into content production around the world,” Netflix notes.
If Netflix is taken as an example, that means even higher cash burn is on the way for Hulu.
Netflix reported negative free cash flow of $608 million in the second quarter 2017 alone, marking an increase from negative $254 million in 2016. The OTT juggernaut indicates its free cash flow shortfall is expected to rise to around $2.5 billion by the year’s end. Still, Netflix says it plans to continue investing in content, with a focus on owned originals, and expects to be free cash flow negative “for many years.”