Wednesday, August 17, 2011

Hulu Changes, But Will It Help Its Sale

Hulu's current owners are cutting back the amount of free content available on Hulu; they prefer a more robust pay model. Consumers, however, are tired of the high cost of cable, and have enjoyed watching their shows, albeit a few days later, for free. A quandary that can lower the appeal of Hulu and may not convert viewers into pay customers. At the same time, the push is on to add more advertising to the mix, thus bringing more revenue to the model. But if viewership declines because of limited free content, how can total ad revenue grow. And ultimately, do these changes help or hurt Hulu's ability to be acquired?

It seems that digital pennies are becoming digital dollars and the early desire to get content online at no cost to the viewer has become less desirable. There is money in online content and content creators don't want to risk it at the expense of its other paid model distributors, like the cable operator. Ultimately, content companies want to be paid for content and viewers will have a harder time getting their content without paying a fee to someone. "The bottom line: There's not yet a cost-effective way to cut the cord completely. Expect the cable companies and network to work hard this year to keep it that way. The genie may have been let out of the bottle briefly, but the men and women in suits are trying desperately to shove him back inside."

If that is the case and consumers keep buying Hulu's premium model, they may be a more valuable takeover target. If the premium platform doesn't grow and free viewing drops, then Hulu may have lost its appeal. Only time will tell.