This morning, a Wall Street Journal story by Christopher Stewart and John Jannarone relayed several damning facts about the current state of Hulu’s business.
- Hulu’s parent companies had to invest ~$100 million in the business last year.
- This year, Kilar wants them to invest another $200 million.
- Hulu loses ~$30 million per quarter.
- Hulu borrowed $338 million this year in order to buy out one of its owners, Providence Equity Partners, and to buy out employees to the tune of $134 million. CEO Kilar paid himself $40 million of that.
- Hulu is trying to compete against Amazon and Netflix with original content, but it’s vastly out-gunned. Netflix is spending $5 billion on it. Amazon maybe $1 billion. Hulu? $500 million.
- Hulu is tiny. It had 22 million viewers in November. YouTube had 152 million.
- Hulu has a tiny amount of paid subs: 3 million versus Netflix’s 28 million.
It’s time to admit Hulu is a failure. Probably, it should have sold to Yahoo for ~$2 billion last year when it had the chance. (Google offered ~$4 billion for Hulu, but it wanted exclusive liscening deals from Hulu’s parent companies, and they weren’t ever selling that.)
Some, will blame Hulu’s failure on CEO Jason Kilar. They’ll say: Hulu is built on the most popular stuff on earth, TV. It gets that content FREE and exclusively from its owners. And yet, five years after its launch, Hulu still loses money and still requires new investment from its parent companies. For this, Jason Kilar got a $40 million payout this year? Can I have that job?
But the fact is Kilar had an almost impossible job from the very beginning:
- Hulu doesn’t own the content it distributes, so it only gets to keep a small portion of its revenues.
- Hulu is, in fact, owned by the companies that own said content. And those owners have little incentive to create healthy margins for Hulu at the expense of their own.
The fact is, Kilar has, in a couple years, built a Web brand that you have heard of. Yes, this was done on the back of free TV and a big marketing budget. But it’s still decently impressive.