Should Hulu Collaborate With TV Network?
All my ideas and throughs are based on one of the Hulu.com's commercial (Hulu evil plot). I raised a few questions to myself and tried to analysis them in the context of media eco-system.
My questions here are: should TV networks (broadcast or cable) collaborate with Hulu? Or, are they better off reserving content for their own online network streams? Is there some middle ground? What can we learn from the early adopters as well as the networks who were late to join the party?
I believe the TV network can probably co-exist with Hulu. Hulu has passed the start up period. The new business challenge Hulu faces in the future is how to boost reach and make the subscription more durable. In this circumstance, collaborating with TV networks will be a good solution, and considered a win-win for both cable and Hulu.
During Hulu’s start up time (2007), high quality content and an effective revenue model are essential for the platform’s growth. The earlier adopters are those who collaborate with Hulu during the time of the platform’s startup. The key idea is “to partner and form an online video venture.” An abundance of premium content is called for to win customers and advertising support. During that time ABC, NBC, and FOX, sd well as the associated cable networks (such as ABC family, FOX FX channel, and NBC’s USA Network), in addition to independent partners (such as Comedy, PBS, and VIZ media) were all considered as the earlier adopter during that time.
Soon the platform wins an audience, and exclusive content is required to attract more customers to subscribe. The late adopters are who participate with Hulu during the time when Hulu needs more exclusive content. During that time, Hulu already had some customer base, and they wished to attract an additional audience through more exclusive episodes. In this phase, Disney signs on. Disney and ABC gave Hulu an exclusive license to distribute full-length episodes from shows such as Lost and Desperate Housewives on Hulu.com and its partner side. (Source: HBS case)
Currently, Hulu has moved beyond its "existential crisis" of whether to be a business supported by advertising or subscriptions, and is now exploring ways to boost its reach and make its subscription model more durable. One powerful way to accomplish this would be to make itself a generic solution for cable operators that want to move their signals online, which will be considered the middle ground in the future. The cable industry’s migration of TV delivery to an Internet model is in its earliest stages, with the various efforts predominantly fragmented and proprietary thus far. Cable companies prefer their customers view television over the Internet because that helps drive broadband subscription growth. (source: SFGATE). The downside of joining the TV network is that Hulu will end up offering less free content and more premium shows once it joins the “TV everywhere” action. In this scenario, there will be a two-tiered system. Some shows will be available for free, but a larger selection will be available only to paying cable subscribers.
