Hulu: as TV landscape shifts, it's pass the potato

Hulu: as TV landscape shifts, it's pass the potato

Summary: Hulu owners Walt Disney Co., News Corp. and Comcast are mulling whether to sell the video streaming site. Will it do more damage in someone else's hands?

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TOPICS: Mobility, Hardware
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From the moment it first launched, Hulu has rapidly reimagined the way we watch television online. But those gains in popularity -- and shifts in behavior -- often came at the expense of the content creators who supplied it.

As such, the site -- which is owned by the Walt Disney Co., News Corp. and Comcast -- is both a blessing and a curse for its corporate owners. The question is whether it will do more damage in their portfolio or someone else's.

The Wall Street Journal reports that Hulu "plans to meet with a range of potential buyers in coming weeks" after a bid from Yahoo piqued enough interest to consider selling the property. (Disclosure: ZDNet's parent company, CBS Corp., owns rival TV.com.) But will its owners also give up control of this new landscape, too?

The key phrase at the center of all things Hulu: "business model." Like any new technology, Hulu undercuts an established industry -- in this case, broadcast television. TV has been a very profitable business for a very long time, with an established (and occasionally precarious) balance between the studios that produce the content, the broadcast companies that distribute it and the cable companies that carry it.

Hulu is effectively a wrench in the oiled gears of this machine, which begs the question: can you innovate and preserve your cash cow at the same time?

Can you have your cake and eat it, too?

The worry is that a sale would just give the competition more ammunition to undermine the status quo. By dealing Hulu away, its owners lose the chance to replace one revenue stream with another -- even of they don't want to do so in the first place.

On the other hand, if Hulu's owners sufficiently stifle development of the site because they're too concerned with hanging on to their existing (lucrative) business, it's possible that another more aggressive competitor will rise up -- undermining their business once more. Only this time, it's without the benefit of Hulu's owners profiting from it.

When it comes down to it, it's a matter of leadership and vision. Chief executive Jason Kilar has pushed Hulu's corporate owners to narrow the exposure of their content on competing services such as Netflix and funnel more of it through a single site -- Hulu.

But some of those other services pay more than Hulu, and it's hard to say no to more money. Kilar clearly has a strategy, but if corporate won't give him the room to execute -- much less the time -- it's D.O.A. no matter how you cut it.

The underlying question is whether we'll continue live in a world where content comes through a centralized portal, or whether we'll begin to subscribe to content from the creators themselves: NBC for NBC, ESPN for ESPN, and so forth. My money's on the latter, but that's not a comforting picture to shareholders.

Either way, it's a tough situation for Hulu's owners: do you give the bomb to your enemies, or hang on to it and risk blowing yourself up?

Topics: Mobility, Hardware

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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14 comments
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  • RE: Hulu: as TV landscape shifts, it's pass the potato

    I think Hulu was not for the win, but for the block. A three-way ownership by content producers who traditionally own their own distribution and, before being stopped, their own exhibition seems overly complex.

    If one owner withholds licensing because the Hulu revenue numbers don't work, then it hurts the other two, who are also likely to withhold their licensing for their most successful properties on their networks.

    The Hulu brand is established. It gets viewers. It makes sense that it be spun off to an independent owner so the equation becomes straightforward: the studios have properties, set licensing costs, and Hulu takes it or leave it, nothing personal, just business. Does that leave a business model for the successor owner? Don't know. It hinges on their ability to expand the audience affordably because that will lead to growth in advertising revenues.
    DannyO_0x98
  • No booms for us

    Not that these are exactly parallel situations, but when the disruptive technology called "the microprocessor" appeared, IBM took ownership of the bomb and accepted that it would cannibalize a fair chunk of their business.

    They held onto it until they could see that the next disruptive technology, the Internet, would allow them to escape into The Cloud to re-grow their mainframe business in peace.

    Point is, IBM is still here. The companies who wished that the bomb would just go away are in the boneyard.

    So yes, sometimes the right move is to grab hold of the bomb and keep it safe while you try to figure out how to escape.
    Robert Hahn
    • RE: Hulu: as TV landscape shifts, it's pass the potato

      @Robert Hahn great point. retaining a business strategy, rather than a specific product, is the way to survive.
      andrew.nusca
  • RE: Hulu: as TV landscape shifts, it's pass the potato

    What am I missing? I thought Hulu was set up to try and compete with YouTube.

    In what sense did Hulu 'reimagine' anything that YouTube and others had not already 'reimagined'?

    The obvious buyer is M$ - but whoever buys, if it becomes too profitable, then the 'old' owners will stop releasing their product to it.

    On the other hand, has Hulu made one cent of profit so far? Has it supported TV's fan base as well as YouTube did before Walt [i]et al[/i] took their ball home with them?

    Disclosure: I'm in the UK, and blocked from seeing it, so I may be missing something big here!
    Heenan73
  • RE: Hulu: as TV landscape shifts, it's pass the potato

    I looked at Hulu early on, but became frustrated that I could not view content on anything other than a PC (there are these things called Smartphones that have browsers on them that can do wonderful things !). I see FINALLY that Hulu is slowly starting to allow Android Smartphones to access Hulu, but at this point, I have already taken the Netflix plunge. Hulu missed the boat by not embracing Mobile devices earlier. I think Hulu's owners want to get out while the getting is good and they still might salvage some value out of the investments.
    jkohut
  • Hulu being sold?

    Probably will result in more commercials and a really good excuse to switch to Netflix or just quit watching television altogether. I'm waiting for the business model that has 5 minute episodes and 55 minutes of commercials each hour. It's coming, without a doubt.
    JonathanPDX
  • From Rabbit Ears to WiFi

    To me, Hulu is really the future and we are at the cusp of the changes. When you watch something on Hulu you are captive the way it used to be before DVRs and VCRs - you must watch the commercials. I don't see why advertisers aren't all over this and requiring every show to be broadcast over the internet - death to the DVR. And what better way to control content?

    I think we'll eventually see better content aggregators with spiffy interfaces that make it easy to find and watch content. Hulu could be THE ONE place to go, which is what I want. Selling this off seem to me to be supremely stupid.
    keaura
    • RE: Hulu: as TV landscape shifts, it's pass the potato

      @keaura Just out of curiosity, why would you WANT to be forced to watch excessive (and ever increasing) ads? Seems just a little weird to me!
      Heenan73
  • RE: Hulu: as TV landscape shifts, it's pass the potato

    When it comes down to it, it?s a matter of leadership and vision. Chief executive Jason Kilar has pushed Hulu?s corporate owners to narrow the exposure of their content on competing services such as Netflix and funnel more of it through a single site ? Hulu.

    -------------------
    Now surely that is anti competitive, with a capital C, wonder in the FTC will open up an investigation into that.
    Knowles2
  • RE: Hulu: as TV landscape shifts, it's pass the potato

    I have never used Hulu, so I can't do much commentary. I have watched shows from CBS and NBC form their sites, you can mute the commercials, but you can't fast forward as we do from a DVDRW. I wish I had a DVR, but most are cable or satellite related or are for home security. I don't want to pay Tivo's monthly fees, so I don't. What I want is a simple machine that will record the show, I want for later viewing without losing anything because the disk (DVD) is damaged. I want it to be as versatile as the DVDR/VCR in that I can set start and stop times, the channel, and not mess with the "codes" that are to make life simpler, which without them it isn't. I sometimes use Windows Media Center, but at present, I haven't found a program to convert the files to a format useable as input to my DVDR/VCR
    dhays
  • RE: Hulu: as TV landscape shifts, it's pass the potato

    Hi, anyone! Did anyone know that Hulu is support to deaf people because they do have subtitle?... So what wrong with Netflix? they never give support deaf people caused they didn't update to now for subtitle... so now Netflix got sued by deaf people... you may look at http://www.prweb.com/releases/NAD/Netflix/prweb8576773.htm So, I hopeful Hulu do not sold to anyone... because I'm DEAF!
    Cat139lyleb@...
  • RE: Hulu: as TV landscape shifts, it's pass the potato

    Hulu is owned by the program makers; they don't allow others to have the subtitled versions, to force deaf people to use Hulu. So you think they're great, but actually they are denying you choice. You should be suing Hulu for not allowing Netflix to use subtitles - Choose your friends carefully.
    Heenan73
  • RE: Hulu: as TV landscape shifts, it's pass the potato

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  • RE: Hulu: as TV landscape shifts, it's pass the potato

    Hulu is a good service for watching shows, however all the <a style="text-decoration: none; color: #333333;" href="http://www.marvelseo.com/">la advertising</a> before and in between the episodes and even 30 second clips is almost intolerable.
    macdev305