Hulu - Worth The Price? Yes And Much Much More
Yahoo is considered to be one of the top bidders for Hulu and it makes sense for the Web portal to try become something beyond just providing Web contents. After all, things haven't turned out the way they expected one of the survivors of the first wave of Internet companies from the late 90s and the first tech bubble.
Hulu is fast becoming one of the top destination for watching television shows and movies. And note that I used the term "television shows". That remains to be so today but will change. Let me introduce the term "episodic shows". The reason for the change is also the reason why Hulu is worth many times more than what's being bid on.
And it'll be worth so much more than whatever the winner pays for.
See, Hulu gets its contents from studios and networks that commissioned those shows. Hulu has to pay them a fee for the rights to stream them to us. It's also the same with Netflix. But a few years back, Netflix got sweet-heart deals. With contracts ending, the studios and networks want what's theirs.
Hulu, Netflix, or anyone else will have to pay princely fees in future contracts. Hence, these companies will look for a way to rely less on these studios and probably go into developing original contents. And these contents will debut first on the Internet.
Netflix has already begun work on this.
What's important to note is that more people are cutting the cord to paid television and going on the Web instead. It's why Netflix and Hulu has become so profitable even as investors worry about the fees they'll have to pay to the studios.
While such shortsightedness is to be expected, the long-term prospects of Hulu and Netflix are secured. And with expansion into foreign markets, the number of paying subscribers will not amount to tens of millions but in the hundreds of millions.
Powered by internally developed episodic shows (eshows?) that will be exclusive to one video portal, it could be a powerful attraction to potential subscribers. Furthermore, Hulu can also resell the rights to broadcast or stream its own shows to others, even Netflix or as reruns on WB.
In essence, Hulu will become a powerhouse for original content. On top of that, the cost of developing these shows could be much cheaper than what studios and networks pay for. Hulu based on the numbers of streams will instantly know if it has a hit or not. If it has a lemon, then so be it, get rid of it. And who is to say that Hulu won't also be buyers of original contents as well?
That is where the future is headed. Television networks will still be around. But it'll be the Hulus and Netflixes of the world that we turn our eye balls to.
There are a number of Hulu suitors. And it's much cheaper to buy them today than to buy them a few years later. Whoever approached Hulu privately about a buyout has to be given credit for having such foresight.
Will it be Yahoo, Google, one of the mobile providers, or even Microsoft? Google would have a similar stake as Yahoo but with much much deeper pockets. Youtube is fine if you want to see crazy videos but it's not my choice of destination to go watch TV or movies. Not even old reruns.
As for mobile, there are now hundreds of millions of mobile warriors using iPHones, Androids, and Blackberries. That number will increase to billions in a decade or so. And we are hungry for mobile content. And yes,billions of eye balls will thank whoever owns Hulu.
Note: I certainly hope its not Apple. They'll ruin things.