Frankly, with its ownership (Fox, ABC, NBC, Universal, others), I don't get that there's a lot of pressure for Hulu to make a profit in 2010. it still feels like relatively early days where video as content is concerned, particularly broadcast (or cable) video as content.
Still, I bet all those broadcasters would like to be generating 99 cents per episode of "Nurse Jackie" or "30 Rock" or Your Guilty Pleasure Here episodes that iTunes duns me for...
Hulu is in the process of blowing through the remainder of that 2007 $100 million investment from private equity firm Providence Equity Partners. So now the burden can fall on FOX (News Corp, NASDAQ:NWS), and NBC Universal (Comcast, NASDAQ: CMCSA) and ABC (Disney, NYSE: DIS) shareholders.
So, I don't own any of these companies stocks, I guess I should take the free ride as long as it lasts and let the stock holders worry about Hulu as a money pit.
terry, you are right, i didn't suggest a solution, did i? I guess if i ran the world (or hulu, whichever comes first!) i would get out of dodge by trying to implement a piss easy subscription plan - something which was a real no brainer as a standalone service, and/or which could also be bolted onto or bundled with a consumer hardware device like and x-box and/or iphone. But that's just me - and after all WHO AM I excpet the founder of multiple hugely profitable successful online businesses?
I don't presume to know the truth (yet).I will look at some more numbers to offer more analysis.
However, I would not say it is a "rob peter to pay paul" argument, because a lot of marketing value is created in Hulu. Think of how many marketing dollars media companies spend to promote their content (in the case of film, it is sometimes 40% of the operating budget). If the companies involved believe there are larger viewership benefits of Hulu's success, they may be willing to subsidize it. Look at it this way: Would you rather pay other people to promote your media or chose to put those dollars into an online entity that you already own?
Also, there are studies that show that online viewing does not cannabilize traditional in a way you would think. Sometimes the "online teasers" actually increase and draw audience to the traditional show. People simply want more of the same stuff.
The best example is The Daily Show, which has a huge online following and also huge TV viewership. Are the two mutually exclusive? I don't think so.
Like I said I have to do more research maybe a blog post next week?
BTW, that analyst, Amel, has gone back into that story and updated it to say that Hulu *isn't* making a profit. Also, you gotta factor in how much of the $120 or $180M in revenue is just coming out of budget that the Hulu owners' customers' would otherwise have spent on their boradcast networks, right?
Netflix seemed to be a threat to all of TV, but with the current quarterly earnings report, it sure doesn't look as if that's true now. Netflix really proves that even Internet viewing of video isn't immune to profit and other business issues. This is a lesson we need to learn if we want a viable online video model.
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