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David Poland

By David Poland poland@moviecitynews.com

Delivelution: Hulu

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.

11 Responses to “Delivelution: Hulu”

  1. krazyeyes says:

    I think Netflix is a lot closer to “everything” than you give them credit for.

    Sure, the streaming content in limited but if they don’t have it streaming they’ll mail you the DVD. I’ve been a Netflix member for years and I can count on one hand the number of times I wanted to see something and they couldn’t supply it. There are holes of course but they’re few and far between.

  2. Mike says:

    I don’t know who is talking about Netflix as “everything,” but they’re really not trying to be “everything” – they’re just trying to be “something right now.” And that’s why they’re so smart. People are turning on their streaming and just looking for something to watch (like turning on cable), not looking for this title or that specific title. There’s always something to watch on Netflix.

    I don’t see a future where there’s a subscription service with everything. The content providers value their content too much to ever do an everything package.

    And you have to give Netflix credit that they’re everywhere. I have like six devices in my house that can play Netflix vs. one or two that can do Hulu. And I can’t be bothered with Hulu, because frankly if you have a DVR, there’s not much need for Hulu.

    Maybe once the content providers figure out what they’re doing and how to do it, that will change (and as Dave likes to point out, Disney is the best poised to go on its own), but for now Netflix is making a great mark at staking a claim to being a piece of the streaming future.

  3. Krillian says:

    Only thing I don’t like about Netflix is the 28-day wait period on half the wide-release DVDs that Blockbuster gets first.

  4. storymark says:

    “I’ve been a Netflix member for years and I can count on one hand the number of times I wanted to see something and they couldn’t supply it. There are holes of course but they’re few and far between.”

    Yep. I can think of two cases where there was something I wanted to watch that Netflix didn’t have on disk. One a semi-obscure British miniseries, the other a random episode of a TV series. Both are on streaming now though.

    About the time that the studios start trying to charge me for a bunch of different streaming services that I’ll jump to bittorrents.

  5. Bitplayer says:

    I hate that Netflix licked studio ass and stopped sending out dvds with extras. Having rentals with extras for an extended period of time was nice.

  6. Monco says:

    I agree with storymark. I will never ever pay for multiple streaming services. I know that DP already subscribes to like 20 different things on his apple devices but this has to reflect like 2% of the population. It will never become standard or get as big as netflix has become.

  7. Mike says:

    The thing is, it’s sort of like the old west out there in streaming land, right now. Anything goes. But, you sort of have to think that the players will get their acts together and realize that people don’t want 7 different services and come up with one for all the players that you get and then tailor to what you want. Kind of like cable, but with different packages: basic, better and most expensive. If people are going to use this service to cut the ($50-$100+) cable cord, the players will find a way that the new service will cost in the neighborhood of $50-$100+ to give you what you do want.

  8. David Poland says:

    Mike gets it.

    And the cable companies may well be the companies that build those packages… cable companies that are no longer driven by their cables.

    And Storymark & Monco… if you have cable you ARE paying for a bunch of different services already. You just pay it in one bill. Manifesting that consumer experience is not that big of a challenge.

    I love Netflix, but I find that about 30% of the time I look to stream something “right now,” it’s there and available. Yes, you can still get the disc… but that’s so 2008!

    Studios tend to be slow and greedy. They try to compete with price points that are too high and then, they overcompensate with price points that are too low and destroy their own markets.

    But they do end up controlling everything they touch, including Netflix.

  9. storymark says:

    “And Storymark & Monco… if you have cable you ARE paying for a bunch of different services already. You just pay it in one bill.”

    Yeah, that last part was kinda the point, David. One bill, fine. But if every studio tries their own service…. Arg. Get me my eyepatch.

    Hell, if they want anywhere close to $100 a month for a combined service, I’ll do the same. They already force me to pay for cable I don’t watch to have my connection.

  10. Mike says:

    There’s an alternative to piracy. We’ve already cut the cord in my house. We use a DVR for over the air networks and an Apple TV to get individual series from cable. The price per episode is high, but if you’re only doing a few series at a time, it’s less than cable.

  11. Joe Leydon says:

    OK, let me ask: I want to see “The Horse Whisperer” now. Right now. Where can I downstream it? Nowhere?

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