Why Hulu’s Owners Couldn’t Find A Buyer

http://techcrunch.com/2011/10/13/why-hulus-owners-couldnt-find-a-buyer/

by aaronbrethorst • 15 years ago

14 13 15 years ago

The most puzzling part of this to me is that the content studios honestly thought it would work.

"We're going to sell you a company with assets which vanish in two years, after which time, you have a company with no assets and the right to negotiate for the right to use of the aforementioned assets at a price to be determined by us."

Yahoo may exhibit tremendous inability to derive value from acquisitions, but not even they were willing to take this time bomb.

ansy• 15 years ago

I think the idea was that none of the Hulu partners felt a real need to keep Hulu around. The Netflix threat has been thwarted. Enough providers have turned against Netflix it can't stand on its own anymore. Everyone with content is instead building its own segregated streaming service around proprietary content.

So what do you do with a very popular but strategically dead product? Sell high is what you do. At least that's what Comcast and Disney wanted to do with Hulu. New Corp's streaming offering isn't quite as mature, so it was fine keeping Hulu for a little bit longer.

The same thing happened with Netflix. What do you do with a popular but strategically dead product like the DVD rentals? Sell high, sell high.

Netfix's DVD business is worth something. Hulu is worth something. They were just hoping it was worth more.

jimbobob2• 15 years ago

This is not surprising news to me.

The issue is that the three owners (Comcast, Disney, News Corp) provide the most popular content on the service. In order to become a truly independent platform, Hulu needs to beef up its offerings so that the loss of any individual content partner would not be a big deal.

They are not there yet, though they are moving in the right direction with Hulu Japan, the Univision deal, etc. As of now, however, the major content partners still hold a large amount of power and the potential buyers saw this from miles away.

sc68cal• 15 years ago

> In order to become a truly independent platform, Hulu needs to beef up its offerings so that the loss of any individual content partner would not be a big deal

Absolutely correct. The main thing is that the only viable independent platform, Netflix, has had serious difficulty maintaining agreements with content providers. That adds a lot of risk and uncertainty for prospective investors of an independent Hulu.

nl3• 15 years ago

The content providers are playing a dangerous game though, and it isn't clear they recognize it.

If they push the price too high then Netflix has the money to go directly to the production houses and buy shows themselves. I know they are experimenting with this now, but it is a model that will become more and more attractive.

Hitchhiker• 15 years ago

The reason is here somewhere..

http://www.sjtrek.com/trek/rules/

jtchang2• 15 years ago

I keep being reminded of the cliched statement: content is king.

The next revolution in the media industry will be brought about by the ability to produce high quality, low budget content.

Things like the RED camera, HD video capable SLRs, point and click video editing software, easy access to compute farms are pointing to a future where video content will be as easy to produce as back in the 2000's where anyone could just put up a webpage with the tags <html></html>.

You can already see it happening and that is what has the old content producers scared.

omarchowdhury• 15 years ago

What exactly are they scared of? Amateurs taking over professionals?

Can't see that happening as the public directs most of their attention to the professionals. On the other end of the spectrum, all of the talent and creativity go where the money is.

nl3• 15 years ago

Not amateurs taking over - a new set of professionals, doing shows cheaper and quicker.

The production values might not be as good, and there will be a heap of terrible content produced, but there will be some hits.

jtchang2• 15 years ago

The current content producers are scared that people can produce the same content for cheaper.

This means if something is a blowout hit then it isn't the studios pocketing the money. The barrier to entry to a "professionally" produced show is a studio, good cameras, good editing, lighting, etc.

Think about how much cheaper all that has become.

rottendoubt• 15 years ago

If I were Google, I would have done it. Offered $2B and taken the 2-year deal with Hulu. Match it up with YouTube, grow it as big as possible, and completely dominate online video to the point of creating a monopoly. At that point, you'd have leverage to negotiate with the studios -- yes they have the content, but you'd have the distribution (think iTunes and record labels). If they don't deal with you and try to launch something separate, they'd have no traffic. And there'd be no real competition on bidding from third parties as they'd likely already have been wiped out by the YouTube/Hulu combo.

Why Hulu’s Owners Couldn’t Find A Buyer

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