In a filing on last Friday, Disney has reported losing an amount $580 million in equity investments in the fiscal year ended Sep 30.
The media company has described the investment in Hulu as the primary contributor to those equity losses who also faced loss of $469 million in its direct-to consumer-segment and that was largely from its streaming technology BAMtech which powers ESPN+ and other over-the-top services.
The sum of both streaming-related losses crosses a $1 billion mark and same is the area of streaming services which is center point of CEO Bob Iger’s focus and expected launch of Disney+ later in 2019 will be the company’s step forward in that area to better compete with rivals like Amazon and Netflix.
The rising costs over technology and contents likely are coming with surged losses in streaming at initial stages of the venture, said Rich Greenfield, an analyst at BTIG. He added that in case of companies that are playing catch-up in streaming, they have to be prepared to face heavy losses arising from it.
As part of the deal worth $71.3 billion for majority stakes of the 21st Century Fox, Disney will be getting control of another 30 percent of the Hulu also and its operating losses would further be increase if it had to acquire Comcast’s 30 percent stake in Hulu.
It is very hard for companies to make money through streaming, and so do for the Netflix also who despite posting positive operating income consistently, had spent heavily for new content and some of the analysts are estimating an amount of $10 billion which Netflix is likely to be spending in 2019 for movies and shows.
Disney is expecting that over the time Disney+, for its tailor made content and library of TV shows and Disney movies, will remain successful to get millions of subscribers to level the losses.