Hulu loses a lot of money — nearly a billion dollars last year, and that will likely nearly double this year.
But Hulu, which had three bosses as part of a joint venture at its inception, will get just one boss soon: Disney. And according to its chief strategy officer, Kevin Mayer, the company plans to put more money in the service.
“It takes an investment for sure, and we’re happy to undertake that,” he said at the Code Media conference in Huntington Beach, Calif. “There’s going to be a big, profitable service.”
That’s a pretty bold plan, since Hulu had been a good news/bad news thing for its owners. Bad news: It lost money, and the three main owners had to account for that loss on their balance sheets. Good news: Each partner also technically made money, since they were selling license rights to Hulu.
You could argue Hulu was really an accounting play that also allowed the big media companies to experiment in online streaming.
That status changes after Disney buys Fox, since Disney will have to own most of the losses. Mayer points out it will also gain revenue from Fox’s portion of sales to Hulu, but even then it means it continues to lose money, which can’t continue to happen.
It also means Hulu may no longer get NBC* shows in the future, since owner Comcast may not want to continue licensing its shows to Hulu, since that will benefit Disney. It likely means the end of Hulu as we know it.
But for Mayer, that shouldn’t change the strategy for Hulu, an important piece of Disney’s larger plan to sell more of its shows directly to consumers via online streaming. In addition to Hulu, Disney will launch a $4.99-a-month ESPN streaming service that will feature a lot of ancillary sports content and not the big, important stuff you see on regular EPSN, like NFL games. Lastly, Disney will launch a family-friendly service in 2019 that will include key Disney franchises from its major studios: Pixar, Marvel and Lucasfilm.
That inevitably means pulling some of its big films off Netflix, but Mayer insists Disney is not trying to kill Netflix.
“I’m a big fan of Netflix,” he said. “They’ve done well in the marketplace. What we’re doing is not kill Netflix, but serve consumers. We think we can serve consumers better.”
Mayer’s point is that all TV businesses will have to find a way to start selling stuff directly to consumers as cord cutting continues. If big media companies can’t continue to rely on the pay TV distributors to capture household consumers, it will have to sell the content directly via streaming. The infrastructure costs and the technology are now at a point where that’s feasible, he said.
Disney, as one of the largest media franchises around, still has the deep pockets to affect big change in how media works in the future, and Mayer will certainly continue to be a key part of its strategy.
He’s seen as a possible successor to CEO Bob Iger, who has cancelled his planned retirement at least three times. In the meantime, there is another job that’s open, and that’s head of ESPN. John Skipper stepped down in December citing substance abuse problems.
When asked if he would want that job, Mayer only replied: “I’m going to do what Bob has me doing, happily.”