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Spotify to offer TV and movies in drive to boost growth

Spotify to offer TV and movies in drive to boost growth

April 12
20:57 2018

Spotify said it will start offering TV and movies along with its music catalogue as it moves to ignite user growth and looks to justify its $27bn valuation, a week after its debut on the public market. 

The music streaming pioneer on Wednesday announced a partnership with Hulu, the online video company owned by a group of media giants including Disney and Fox. For $12.99 a month in the US, subscribers will gain access to both Spotify’s 40m song catalogue and Hulu’s 75,000 TV shows and movies.

The bundling deal was one of several moves being planned by Spotify to help it fend off competition from Apple and Amazon in the fast-growing streaming market.

The Hulu offer aims to entice more people to sign up for Spotify’s premium subscriptions, which make up the vast majority of its revenues and have resurrected the music business. 

The Swedish start-up faces greater scrutiny of its user numbers as a public company, with user growth being a particular focus of investors because the company is still lossmaking. It had 71m paying subscribers at the end of last year, well above Apple Music’s 36m, but Apple has been catching up, particularly in the US.

Spotify also offers a more limited music streaming service for free, and is working to revamp this product in the next few weeks, said people with knowledge of the plans.

Spotify has long used its free service as a way to lure people to its platform, and eventually convince them to pay. Apple does not offer a free music service. Spotify declined to comment.

The challenge in music streaming is to differentiate in what has become a crowded market, says Mark Mulligan, analyst with Midia Research. “At the moment the way the services are is essentially, you’re buying the same car with the same price, engine and paintwork.” 

Amazon has become a third contender: the ecommerce giant has become a significant force in TV and movies and says it has accumulated “tens of millions” of subscribers to its music streaming service, but declines to give an exact number.

Spotify expects it will reach more than 200m users by the end of the year, and nearly half of them will pay. The bundled subscription with Hulu offers “two top media platforms for an unbeatable price,” said Alex Norstrom, Spotify’s chief business officer. 

Shares in Spotify were down 1.5 per cent at $152.65 in lunchtime trading in New York on Wednesday, versus the $165.90 at which it debuted on April 3.

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