Tuesday, April 30, 2013

Hulu Growing Despite Sale Rumors

Hulu's owners might need to stop thinking about whether to sell their positions in what looks to be a very successful business.  Perhaps it is because they compete with each other in the broadcast and cable space, but if the Fox, NBC, and ABC parents can put their differences aside, they have a partnership in Hulu that continues to grow and perform.  "Hulu said today during its upfront presentation in New York that it set a revenue record in the first quarter of this year with $695M, and that Hulu Plus subscriptions passed 4 million subscribers after doubling in 2012."  And while that is quite a bit smaller than Netflix and Amazon Prime, it means that there is still quite a bit more growth ahead of it. 

By following a strategy of developing original exclusive content for its site, Hulu recognizes a similar strategy being deployed by others.  Keeping the pipeline full and flowing assures that consumers continue to pay their subscription fees and use the streaming service.  And as these upfronts show, there are some original productions already in the mix and prepping for release, including The Awesomes and The Wrong Mans that sound quite good.

Whether the Hulu partners wish to compete in this space through this entity or sell off this asset, remains to be seen.  If they do sell, I can predict that their should be a number of parties eager to bid for it in order to own the Hulu business. 

SiriusXM Replaces Karmazin And Reports Growth

With Mel Karmazin now gone, Sirius looks to his replacement Jim Meyer to continue to grow the company.  For the first quarter, Sirius saw subscribers, revenue, and income all grow, but perhaps not as high as the stock market would like.  Most concerning may be the cost associated with keeping subscribers paying and not leaving or churning from the service.  As more and more automakers include Sirius in their audio package, the challenge is getting these customers to take the service past the free period.

As a new car owner, I enjoyed the free period but admit to not purchasing the service when the free trial ended.  We tend to drive less and use mass transit more.  Most car use for us is short trips around the area with few long distance driving.  The result, the radio is not on that long in the car.  And local radio stations provide the news, sports, and music that we need.  We can also link to our iPod when we desire to personalize the music we want to hear.  I would however consider a Sirius subscription if my driving habits required more long distance, out of area trips, where station strength fades and switching stations is a requirement.  Sirius provides a valuable assortment of entertainment for those kind of drivers.

Whether Sirius can reduce its churn to increase subscription above expectations remains a challenge.  Price point also plays into the consumer decision to retain or leave the service.  But given that Sirius has an opportunity to also grow ad revenue can help improve their bottom line.  It also helps that better research can be gleaned from listeners to help sell a more targeted ad campaign.  The hope I'm sure for Sirius is that an improved economy means more call sales and more customers testing the service.