Hulu Ponders Pay TV Model as NBC Pulls Back; Where Does That Leave Comcast?

by Wayne Friedman, Jan 28, 2011, 5:02 PM

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 Pushed around by the still-hot media commodity that is Netflix, the rumblings are that Hulu needs to step up its game by moving more strongly into a pay-TV model.

No, Hulu Plus won't cut it. That is just a little sideline business and consumers can't really distinguish much between it and regular old Hulu.

The Wall Street Journal cited sources saying that Hulu's owners want to make it a "virtual cable operator." You know who are the main Hulu owners ? News Corp., Walt Disney, and... oh, yes.. .Comcast, the new owner of NBCUniversal.

Oh, by the way, doesn't that last company own cable systems? You know, the old-school variety, where someone might come to your home to hook up some wires, or now maybe a wireless device?

From a broader prospective, the owners of Hulu want it to get more aggressive. Apparently, $250 million in annual advertising revenue isn't enough. Hulu now needs to move into the big time, into the arena where Netflix lives with $2.13 billion in annual revenue.

Things move fast. Only a couple of years ago, Hulu's biggest problem seemed to be YouTube - both its dominant position among monthly unique users and its overall activity. Hulu did become a media darling, for a short time, because it was able to separate itself from the riff-raff of all those user-generated video pixels. Give Hulu credit. It virtually established the term "premium video" versus other lesser quality-Internet video content.

Now, Hulu is back on the defensive. Right in Hulu's backyard, Netflix is making more aggressive deals for exclusive content with studios, including some of Hulu's owners. That's not all. Now Fox and ABC want to take back some free Hulu content, perhaps to sell it to.... you can guess.

Making Hulu a total pay-video service seems to be the direction favored by executives like Chase Carey, president/chief operating officer of News Corp. But wouldn't that make Hulu a "virtual cable operator' -- offering channels and on-demand programming like traditional cable operators?

And would Comcast have a issue with that? Even if you could distinguish between the two products -- traditional cable system TV packages and new Internet-delivered packages -- all this would seem to get a bit muddy. Especially for consumers. When new media products arrive at great speed, with seemingly great entropy, consumers tend to be confused -- and to take no action. You better have a good and big marketing plan here.

It's no problem if Hulu executives have time to kill -- perhaps waiting to see if they can raise $2 billion in an IPO. But that's not the way things work in a fast-moving digital world.

 Welcoming NBCUniversal employees into Comcast at a Town Hall meeting on Thursday, Chairman/CEO Brian Roberts said that NBC is "the only major broadcast network with multiple entertainment channels and shame on us if we can't find a way to take advantage of that."

Ooooh. Parental sounding guidance from a big media corporation always goes a long way in preventing disappointment with wayward children --- as well as soothing any sibling rivalry.

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0 comments on "Hulu Ponders Pay TV Model as NBC Pulls Back; Where Does That Leave Comcast? ".

1. Douglas Ferguson from College of Charleston
   

   commented on: January 28, 2011 at 5:33 p.m.

   It does not help that regular Hulu will not display on an iPad.

2. Paula Lynn from Who Else Unlimited
   

   commented on: January 28, 2011 at 6:42 p.m.

   Where does it leave Comcast? Cracking a whip.

3. Chuck Lantz from 2007ac.com, 2013ac.com network
   

   commented on: January 28, 2011 at 9:23 p.m.

   This sentence should be carved in stone:

   "When new media products arrive at great speed, with seemingly great entropy, consumers tend to be confused -- and to take no action."

   Amen, brother and sisters. Very few consumers want to pay for the privilege of being among the first test pilots for the Next Big Thing, especially when the ground is strewn with the smoking wreckage of all the previous Ex Big Things.

   Aside from that, I get the feeling I'm not the only one worried that the Comcast - NBC deal will turn out to be one of the worst decisions ever, and sooner rather than later.

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