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Hulu Zooms to 28 Million Total Subscribers, Up 12% So Far in 2019

Hulu kicked off 2019 by rapidly packing on subscribers — driven by price cuts and promos — with the streamer announcing that its total customer base has swelled to over 28 million. And the money-losing company, now majority-owned by Disney, is investing in more original content in a bid to sustain that momentum.

Hulu’s sub base is up 12% from the end of 2018, when it had 25 million total subscribers. The company, at its 2019 Digital Content NewFronts pitch-fest Wednesday in New York, disclosed that it now has 26.8 million monthly paid subscribers and 1.3 million unpaid promotional accounts. That means its paid subscribers are up 16.5% year-to-date, from 23 million at the end of 2018.

The sub surge comes after Hulu dropped the price of its ad-supported subscription VOD plan to $5.99 per month in February (from $7.99) alongside an effective price cut of the Spotify Premium-Hulu bundle to $9.99 monthly (from $12.99) in March. Hulu still doesn’t break out how many of its subscribers are on VOD-only plans versus its live TV package but has previously said the majority are on the entry-level, ad-supported SVOD tier.

Hulu’s subscriber growth outpaced Netflix in the U.S. in 2018, with Hulu netting 8 million users last year. And according to its latest numbers, Hulu topped Netflix’s domestic growth in the first quarter of this year. That said, Hulu’s U.S.-only customer base remains less than 50% of Netflix’s domestic streaming membership.

At Wednesday’s NewFronts event, Hulu announced several big new additions to its content slate and other news:

Hulu’s new programming slate joins the streamer’s roster of upcoming original series. Those include an adaptation of “Catch-22” from George Clooney; “Four Weddings and a Funeral” from Mindy Kaling; “Wu-Tang: An American Saga” from Brian Grazer and the RZA; and “Little Fires Everywhere,” from Reese Witherspoon and Kerry Washington. Its current originals include award-winning hit “The Handmaid’s Tale” along with “The Looming Tower,” “Shrill,” “The Act,” “Marvel’s Runaways” and “Castle Rock.”

The streaming venture’s ongoing investments in content and technology mean it’s going to keep operating at a loss for the next few years. At the Disney Investor Day on April 11, Disney CFO Christine McCarthy projected that Hulu’s operating losses will peak at $1.5 billion in Disney’s fiscal year 2019 (which ends in September), with Hulu achieving profitability in fiscal year 2023 or 2024. She also projected Hulu’s subscriber base will hit 40 million-60 million by the end of fiscal year 2024.

In Q1, Hulu’s losses continued to mount. Per Comcast’s 10-Q filing with the SEC last week, for the three months ended March 31, Hulu had a loss of $470 million (versus $437 million a year prior), based on losses reported as a portion of Comcast’s ownership stake. Comcast also invested $233 million in cash into Hulu in the first quarter.

Even with Hulu’s subscriber spurt, it’s worth noting that the company — whose services are currently available only in the U.S. — trails SVOD leaders Netflix and Amazon Prime on a global basis (see chart). In the States, Hulu’s paid customer base is roughly 45% the size of Netflix’s 60.2 million paid U.S. subscribers as of the end of Q1. With Disney taking a controlling interest in Hulu, the Mouse House is plotting international expansion for Hulu but those plans are still on the drawing board.

Disney sees Hulu as a key pillar in its direct-to-consumer strategy, serving as a home to more adult-oriented entertainment fare alongside the forthcoming family-focused Disney+ SVOD launch in the fall and the ESPN+ sports package. Disney says it’s likely the trio of streaming services will be bundled together at a discount at some point.

Disney secured 60% ownership of Hulu after closing the deal to buy most of 21st Century Fox’s entertainment assets for $71 billion. In April, AT&T sold WarnerMedia’s 9.5% stake to Disney and Comcast for $1.43 billion, suggesting Disney will own two-thirds (67%) of Hulu and Comcast/NBCUniversal will hold on to the remaining 33%. Disney is interested in buying out Comcast’s stake to gain full control, and Comcast reportedly has been mulling such a deal. But for now Comcast sees Hulu as “really valuable… And we’re really glad we own a large piece of it,” CEO Brian Roberts told analysts on the company’s earnings call last week.

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