Initially formed as a joint venture between NBC Universal and FOX, Hulu is a website that offers free, ad-supported streaming video of TV shows and movies. It primarily offered TV shows from FOX and NBC, subsidiary cable channels, and full-length movies. Hulu is an incredibly popular website. According to Quantcast.com, Hulu receives 17 million visits per month globally.
However, Hulu has had many doubtful critics since its debut. Although it has received universal recognition as an outstanding product, critics doubted the feasibility of Hulu's business model for a number of reasons: Hulu was too dependant on a small number of content providers, it incurred most of the costs of streaming videos while its partners take most of the revenue, and its content partners were also its primary shareholders (creating a potential conflict of interest).
Hulu's partners refuse to give up exclusive online rights, because they do not want to give up control and limit their options. They also don't want Hulu to become too powerful. Currently Hulu gets only 20-30% of the revenue it generates and its partners would not want that to change.
Another criticism targeted Hulu's operational strategy. The method in which Hulu uploaded videos put the company at a significant disadvantage compared to one of its main competitors, YouTube. By allowing anyone to upload videos, YouTube had the advantage of being current. Any popular video could be seen on YouTube well before it was available on Hulu.
In an effort to quell these fears, Hulu has recently signed a new content sharing deal with Disney. According to WSJ online (see link below), Disney is "ceding some control over the online distribution of its ABC television and other programming in exchange for an equity stake." This will make Hulu the first outside site to stream ABC videos. This news is likely to be unsettling for Hulu's main competitors: Apple (iTunes), Google (YouTube), and CBS (TV.com), particularly Apple who sells video content online.
Will this new deal improve Hulu's sustainability? Possibly. However, Hulu must also address the issue of rising costs. As demand increases for high definition video, it will become more expensive to provide videos. Higher quality videos require more data, more data requires greater bandwidth capacity, and greater bandwidth capacity costs money. Furthermore, Disney now has a large stake in Hulu's revenues. Hulu can improve popularity by increasing content, but at some point it must address its future profitability.
http://online.wsj.com/article/SB124110275139073305.html
1 comment:
I have been delving into this topic as I have been researching Move Networks for my groups project (Met Opera). Anyone alive in New York is aware of the Met's campaign for Met HD Live - where live performances are broadcast from the Met Opera. Evidently its uses Move Media to stream its performances. Move Media is known for providing high quality streaming television to major networks such a ABC, ESPN, CW and FOX (can we say Disney?) The Move player requires a small download. I of course went directly to abc.com to see if I could uncover where on the site it says "Move Media" - but found it was only referred to as "The Software" in the terms of agreement. I then went to hulu to see if I could view Lost (as an example) - only to find out it leads me directly back to abc.com as the above blog mentioned. I find this very interesting. With Disney's "overtake" of hulu (though not surprising as three of hulu's board members are from disney) - Does Disney now own the internet television world?? I always associated Hulu with NBC. Linking to ABC does this mean that Disney has the upperhand? I assume it has a much better way of tracking its customer's paths if they have return to the abc site to download a plug-in to use the player. Hulu doesn't require a download.
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