Monday, August 16, 2010

Would You Buy Hulu Stock?

Hulu and its partners are ready to go public and perhaps get some value confirmed on their investment. It seems an IPO is being planned and the public will have a chance to share the ride. But will it spell success? Not every IPO is successful and not every new technology is sustained. I mean whatever became of Prodigy.

Hulu has plenty of competition, from cable as well a other streaming services like You Tube, Netflix and Apple. It works with a single ad revenue stream and is trying to break into the subscription revenue model. It makes a little profit, but can that trend continue as cable expands into the streaming space. "An offering would be among the most significant developments for Hulu in its three-year history. Founded as a joint venture of the News Corporation, the Walt Disney Company, NBC Universal and the private equity firm Providence Equity Partners, Hulu aimed to be a counterweight to YouTube and other free video sites." But is it also being used as a chance for these partners to cash out their investment costs and, like the poker table, just work with its winnings.

It's a tough economy, so not every IPO is a winner. I like to dabble in stocks, but I am not a believer in Hulu. Ultimately, I believe its competitors are better positioned in the long run. And when multiple big ego companies own pieces, and you can bet they don't easily get along with each other, Hulu management must have a hard time getting anything approved by its partners. That slows down their ability to adapt quickly to change in an ever changing entertainment landscape.

1 comment:

  1. Remember the Vonage IPO? That was a fiasco.

    Hulu's usage is dropping and while they might be able to carve out a short term niche because of the studio support, the online media scene is still too in flux and Hulu is not making a big enough dent in it.

    Honestly, I think it's going to shake out to the services that get built into TVs, and the VOD over IP market that's taking advantage of those services is going to end up the long-term winner.