Friday, May 24, 2013

Hulu Next Steps

The owners of Hulu, Disney, NBC, and Fox, may have created a monster.  While it provides a new revenue stream from online subscription and advertising, it also appeals to cord-cutters, those consumers that have dropped their cable subscription for online content only.  For the parents of these owners, ABC, Comcast, and News Corp, that means the loss of monthly cable license fees and TV dollars.  And no doubt, the new revenue stream won't cover the loss of the old revenue stream for quite some time.  So what to do?

Some owners want to sell Hulu and there are a number of possible buyers kicking the tires, including Time Warner Cable and DirecTv.  But once sold, would the former owners continue to license their content to the venture.  Other ideas include converting Hulu into a TV Everywhere platform for authenticated cable subscribers.  But what about those current subscribers that are not cable customers?  Dropping them would mean a loss of subscriber revenue and hurt the growth of the venture.

The truth is that the genie is already out of the bottle.  If Hulu doesn't want to reach cord cutters, others will and have already.  In fact, Netflix and You Tube rank as the top two sites in online video consumption.  Hulu owners should actually look at this platform as actually recapturing lost cable customers.  And Hulu is already trying to gain more revenue with a heavier load of advertising content. 

The simple fact is that the cost of cable for consumers has risen so fast and gotten so expensive that some folks can no longer afford it.  Broadband has become more crucial to their home than cable and the content online can be enough to satisfy.  Hulu becomes that next platform that at $7.99 a month is much easier to afford.  And online video, whether offered by Hulu or someone else, will not go away.  Cord cutting will increase but the decline in cable subscription will be gradual.  Hulu owners need to embrace this evolutionary change in viewing as it is inevitable and growing quickly.

If the current Hulu owners can get along and agree, they would find that maintaining their current approach while exploring more TV Everywhere approaches is the way to go.  If they can't agree, then it is indeed time to sell and let others with the passion for innovation  take the reins.