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Premium streaming video service Hulu is allegedly asking for a new $2oo million investment from its media company owners, according to a Wall Street Journal report that cites unnamed sources familiar with the matter.
The rumor comes just days after Hulu chief exec Jason Kilar announced some impressive data about the service’s growth in 2012. Hulu now has three million paying subscribers of its Hulu Plus service, and it brought in a total of $695 million in revenue — a 65 percent increase compared to last year. But the company also spent about $500 million on content and didn’t disclose its other expenses, which could include promoting its original content and expanding into new international markets.
The $200 million investment, according to WSJ’s sources, would help create more original programming and expand into other countries. Both of these areas are a core part of the business strategy for Hulu competitors Netflix and Amazon Prime Instant Video, meaning Hulu may just be making sure it keeps up. Netflix has committed up to $5 billion for content over the next few years, which includes original shows, such as House of Cards, Lillyhammer, Arrested Development, and more. And today, Amazon released details for six new pilot episodes of original programming to air on Prime Instant Video.
The real question is whether Hulu owners News Corp. and Disney will be willing to take a chance by investing more money into a streaming service that hasn’t entirely proven itself as a profitable business despite its record year-over-year growth. The two companies differ greatly in their opinions of Hulu’s business strategy, with Disney/ABC preferring the freemium model and News Corp./Fox pushing for an all subscription-based model.
The WSJ report also indicated that Hulu could be taking a loss of up to $30 million for the year, which is based on earnings data from Disney’s most recent quarterly report. If this is true, it could be much harder for Hulu to get additional money.
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