Though Disney has not launched its streaming service as yet to compete with Netflix and others, its investors are already feeling the economic challenges posed by this mode of entertainment. In a financial filing made late last week the firm said that its investment arm Hulu lost $580 million during last quarter which ended on September 30. In another filing Disney declared that it lost $469 million from BAMtech that is part of its direct-to consumer business and powers its ESPN+ and other exclusive services. These sums are more than $1 billion that the firm’s CEO Bob Iger is planning to invest in its live streaming business.
Disney will launch its streaming service called Disney+ to compete with the likes of Netflix and Amazon in 2019. According to analysts from BTIG, the initial days of streaming business are cash burning days as even though Disney has content the technology expenditure to set up the operations and go through the hoops till it establishes steady clientele lead to severe losses. Once Disney assumes complete control of 21st Century’s Hulu that was part of its $71.3 billion deal by purchasing 30% of Comcast’s 30% holding in the firm it would lead to further operating losses.
Though Disney has not disclosed its prices as yet it is hoping that in future once the streaming services is launched millions of customers across the world will subscribe to its library of original content, movies and shows. Disney’s wide group of networks include ESPN, ABC Disney Channel and its recent acquisitions and also bought a majority stake in BAMtech so its 2018 report will be the first one to show consolidated earnings from all resources. Recently Netflix which declared that its global subscriber base has grown to 139 million also stated that it is raising its subscription rate from 13% to 18%.