By David Poland firstname.lastname@example.org
Hulu’s value is simple… it already exists.
Hulu’s problem is simple… it can’t created enough revenue at this stage to make its three studio partners as well-paid as they would be if Netflix was paying the big dollars it’s been paying for content in the last year.
Google, in particular, needs a platform that can be distinguished from the free YouTube as they try to move into a subscription/ad model for some content. Yahoo! would like to get there first, which makes a standing business attractive.
in the end, I believe a content player will own both Netflix and Hulu, unless either one functions as a stand-alone brand with a fairly specific niche of content.
The Hulu questions, right now, are:
1. Is Hulu really in Disney’s plan for world domination?
2. Would Fox be better served right now by owning Hulu outright?
3. Does Comcast have a real vision at this point for the future of their digital/streaming business?
The idea of three studios coming together was great… until other content buyers entered the market and were willing to pay more than the Hulu model earned, split 4 ways (with their investors being the fourth entity). Now every one of these businesses sees things differently and have been emboldened to feel they can do a streaming business on their own. And they can. And they likely will.
Selling Hulu would make the investment profitable and simply delay the inevitable tipping point at which point studios will be ready to go back to owning the delivery systems that have primary use of their content.
Jeff Bewkes spoke, out loud, what they are all thinking about Netflix… and ultimately Hulu. Boiling it down… “Nice place to stream your old stuff that no one wants to pay for, so long as they keep paying so well.”
And that suggests one reason for the trio of studios to keep Hulu. If they fully committed to the idea of Hulu (And Hulu Plus) being a warehouse for pretty much every old show they have in their libraries (Universal is a lot more invested in this, so far, than the other two) as well as the first month of reruns for ABC, NBC, and Fox, and a solid selection of their back catalogs of feature films, Hulu is more than competitive with Netflix immediately… and more than Netflix long-term.
But then you have FX and the Universal movie and old TV cable/satellite channels, and Disney Channels to fill. You have Netflix throwing money at libraries, often in non-exclusive deals, making it too good to not grab. And you still have dozens of pay-tv channels, as well as basic cable channels looking to pay for content now.
Netflix has the image of being “everything.” It’s not true, but it’ how people see them. For Hulu to be Netflix II, it needs to set it’s flag. But without clarity from ownership, it’s strength becomes its weakness and as much as people, like me, can see its value, it cannot be effectively sold – especially as a pay service – to tens of millions more customers who would be well served by Hulu Plus.
Look at how cleanly Time-Warner has handled HBOGo. I don’t know what their long game is, but they have made great inroads into winning hearts and minds by being smart, relentless, and less precious about launching on the service and not just on the network. True Blood will gets its opening numbers… and then, HBO isn’t scared of taking a little bit of the heat of the fastball by making Episode 2 of the new season available online.
Netflix proved it. Anything is possible, so long as you focus. Until, of course, things change.
To me, the future seems a lot less complex for the consumer than it has been before… but until we get to that future, everything is up in the air… waiting for the content owners to focus.