Hulu May Be Growing Too Fast for Success

JohnWallStreet

For 3 straight nights (Friday 2.16 – Sunday 2.18), Hulu experienced widespread log-in issues that prevented subscribers from viewing NBA All-Star Weekend and the 2018 Winter Games. The glitch on Sunday night occurred around 9p EST, the scheduled tip-off time for the All-Star Game (on TNT) and during NBC’s prime time Olympics coverage. It hasn’t been a strong month for the live streaming service; technical issues during the Super Bowl, including blank screens during the last 2 minutes, forced Hulu to offer one-month credits to those affected. No other live streaming service (i.e. DIRECTV Now, Sling TV or PlayStation Vue) reported issues during Sunday evening’s events.

Howie Long-Short: Research by the Boston Consulting Group indicates a striking correlation between revenue growth and company mortality (read about Compaq); in other words, the faster a company grows, the shorter its expected lifespan. Moderate growth is proven to be lower risk; Hulu is growing quickly (here’s a story headlined, “Does Hulu’s Rapid Growth Spell Trouble for Netflix and Amazon?”). While subscribers are up 41.6% (to 17 million) over the last 18 months, the company is now spending over $1 billion/year on advertising and lost $920 million in 2017 (up from $531 million in ’16). Losses are expected to increase 80% to $1.7 billion in ’18. CMCSA, FOXA, DIS & TWX will be investing another $1.5 billion into the company this year. Shareholders should be concerned about the cost of customer churn; companies that fail to deliver when most desired, don’t stay in business long.

Fan Marino: While on the topic of live streaming services, YouTube TV (GOOGL) announced it would be adding TNT, CNN, TBS, MLB Network and NBA TV to its service; while subsequently increasing the cost of the offering from $35 to $40 (note: Hulu’s 50 channel package is also $40). The average cost of a broadband plan in the United States is $66.17; tack on $40 for YouTube TV and you’re now paying over $100/mo. What exactly is “skinny” about that?

Interested in Sports? Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!

Join the Community on John Wall Street
Enter your email address and press the Join Now button to sign up for updates from John Wall Street
Comments

Sports Business

FEATURED
COMMUNITY