Kilar Exits Hulu, Site's Fate Uncertain

by Gavin O'Malley, Jan 4, 2013, 5:57 PM

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As was widely expected, Jason Kilar is leaving Hulu.
 
CEO of the company since its debut in mid-2007, Kilar said Friday that he planned to move on before the video venture’s second quarter.
 
“I am currently working with the Board to ensure there is ample runway to manage this transition,” Kilar said in an email to Hulu staff on Friday.
 
Analysts on Friday questioned Hulu’s future without Kilar at the helm.
 
“His departure doesn't leave the company without smarts and innovation, but it does suggest that the company no longer values those traits as much as it used to,” said James McQuivey, a media analyst for Forrester Research.
 
“The company no longer wants to be the smart, consumer-obsessed disruptor that it set out to be when it picked up Kilar in the first place,” McQuivey added. “Instead, it wants to be a safe haven for media companies that don't want to be left out of the Internet video revolution, but also don't want it to get ahead of them.”
 
Rich Tom, Hulu’s chief technology officer, will also exit the company during its first quarter, Kilar revealed Friday.
 
Web watchers have been predicting Kilar’s departure since last October, when Providence Equity Partners finally sold its 10% stake in Hulu.
 
Per the divestment, Kilar reportedly received roughly $40 million, while other top Hulu executives (whose shares had already vested) were given the option to cash out of the company.
 
Originally purchased in 2007 for $100 million, Providence Equity reportedly sold its share back to co-owners News Corp., Comcast, and Disney for $200 million, which valued Hulu at $2 billion.
 
Along with executive departures, the exit of Providence Equity sparked wide speculation over the future of Hulu’s licensing agreements, and its ability to maintain exclusivity over premium content. Recent content deals with World Wrestling Entertainment -- and the expansion of its partnership with Viacom to include Nickelodeon content -- suggested that company was moving in the right direction.   
 
Still, without Kilar, Hulu's fate is now uncertain.  
 
“Hulu remains a top video destination on the Web, and is in a good position to capitalize as more consumers shift viewing habits and as video advertising dollars rapidly flow online,” said Clark Fredricksen, vice president of Communications at eMarketer. “That said, Hulu faces increasingly stiff competition from other companies offering a fast-growing array of premium video content.”
 
The overall U.S. online video ad market grew 46.5% to $2.9 billion, last year, according to eMarketer. This year, advertisers are expected to spend $4.1 billion on video ads in the U.S., eMarketer estimates.

The number of people who watch TV shows online is growing steadily. More than 30% of the U.S. population watched TV online in 2012, up from 26.6% a year earlier and just 22.4% in 2010, according to eMarketer.

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