Apple and Hulu: like oil and water

Apple and Hulu: like oil and water

Summary: iTunes and Hulu appear be on a collision course, which could be why Apple is considering a Hulu acquisition. The problem is that that the two companies have diametrically opposing views.

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What's a company to do when it has $76.2 billion in cash in the bank? Why, go on a spending spree of course!

In its Q3 2011 earnings conference call with investors Apple disclosed that it's sitting on a huge nest-egg of cash. From the transcript:

Our cash for short-term and long-term marketable securities totaled $76.2 billion at the end of the June quarter compared to $65.8 billion at the end of the March quarter, a sequential increase of $10.4 billion. Cash flow from operations was $11.1 billion, an increase of 131% year-over-year.

Two sources tell Bloomberg that Apple is considering a bid for video streaming service Hulu:

Hulu would give Apple a new subscription service and represent a possible challenge to Netflix Inc. Hulu’s media- company owners, Walt Disney Co., News Corp. and Comcast Corp.’s NBC Universal, are offering suitors a five-year extension of program rights, including two years of exclusive access, people familiar with the matter said earlier this week.

Sound familiar?

Readers of this blog should remember that I encouraged Apple to go on a spending spree in 2008, 2009 and 2010. I even recommended that Apple acquire Hulu back in 2008, noting that it may be tough because Hulu has the backing of NBC Universal/Comcast and Fox/News Corp., which may not go down without a fight.

In 2006 Disney acquired Pixar for $7.4 billion making Steve Jobs the largest individual Disney shareholder. In May 2009 Disney announced that it would invest in Hulu (a stake estimated at 30 percent). So by extension, Jobs may have a significant amount of influence in the deal after all.

Would Hulu help Apple or hurt it? It appears that the two companies have diametrically opposing views. In May 2009 I asked the question "Could Disney's investment in Hulu upset the iTunes applecart?"

Business Week’s Cliff Edwards points out that Apple neither creates video content nor does it distribute it for free online. Both of course, are core features of Hulu.

The threat is that Hulu is streaming free (albeit with ads) what Apple is trying to sell and rent. Gartner’s Michael McGuire adds that we could be seeing a shift away from paying for video content to streaming it for free, saying “over time, perhaps the direct-payment model goes away.”

Hulu’s leading the movement to try to convince iTunes customers that they don’t need to purchase downloads and that ad-supported video content is better because it’s free.

iTunes and Hulu appear be on a collision course, which could be why Apple is considering a Hulu acquisition. I just hope that Apple doesn't shutter the service like it did with music streaming service Lala.com which it acquired in 2009.

Photo: AppleGazette

Topics: Enterprise Software, Apple, Banking

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10 comments
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  • RE: Apple and Hulu: like oil and water

    Is it just some messed up problem with my browser rendering, or is that first sentence way screwed up?
    Aerowind
  • Alas poor Hulu! I knew him, Jason.

    my feelings on what will happen should Apple get a hold of them.

    Nothing is better then paid content, except when that content is free.

    Or worse yet, when that content becomes Apple hardware specific.
    William Pharaoh
  • Hulu is going nowhere until they let you watch their

    video on a TV.
    fr_gough
    • You can watch HULU on a TV

      @fr_gough
      I watch HULU on my HDTV via my Internet connected Samsung Blu-Ray Player. I'm sure there must be other devices out there that provide the same service.
      bws605
  • RE: Apple and Hulu: like oil and water

    If Hulu is sold to crapple, it will be the last day I ever visit the site.

    Apple is crapple.
    timspublic1
  • RE: Apple and Hulu: like oil and water

    HULU sucks
    Hasam1991
  • RE: Apple and Hulu: like oil and water

    i think it will be great. itunes will have everything then.
    you can watch for free with ads
    you can rent individual shows/movies
    you can get a monthly plan
    you can buy.
    etc etc.
    it will be an all encompassing ecosystem
    rocketboy5114
  • Lala's technology is going to be used on iTunes in The Cloud (Match)

    The subject.
    DDERSSS
  • RE: Apple and Hulu: like oil and water

    Hulu is good for watching old runs of TV shows but their movie selection sux. Actually, I don't what Apple has to gain from aquiring Hulu besides getting access to some of those old shows (if that would even happen) and shutting them down to eliminate competition.
    Tigertank
  • Hulu needs Apple, not the other way around

    Apple can easily add "Hulu-like" services to iTunes without the need to purchase Hulu. The proven ecosystem is there and Apple has the power to get good licensing deals without breaking the bank and enough mussles to keep the licensing cost down.

    On the other hand, the only thing Hulu has is that it is owned by NBC. Once it is passed to someone else that advantage is nullified.

    It is Hulu who needs Apple to survive and grow beyond where they are now.
    wackoae