Is Hulu a Stud or a Dud
I have had my eye on Hulu for quite a while now, literally and figuratively. Since I chose to commit the carnal sin of the modern man and throw away my plasma some three years and change ago, Hulu has been my occasional medicine for my television jones. Now that whispers of a takeover bid are in the air I want to bring up a subject which I have spent a good deal of time wondering about over the years.
Is Internet Television a Viable Business Model?
Sometimes it is hard to admit to ourselves that we are still in the infant stages of this internet thing. Humans have a hard time coping with uncertainty and though the internet is a capitalist’s wet dream on the surface, it has also created a great many inefficiencies we as of yet cannot (or perhaps, rather would not) address.
Internet television is one such conundrum. Like most advertising delivery vehicles, it is next to impossible to gauge its true efficiency in connecting potential buyers and sellers. In this regard it is very much like a non-transparent market. Feel free to giggle or snarl at the thought of the box as the original black box trading mechanism.
As the internet continues to displace all forms of old media, television is the one least likely to go quietly. This is precisely why I have no clue how to begin to value a company like Hulu.
They have already (understandably) begun to move rapidly away from the no commercials model of early internet television sites. The common argument would be that they have a far more sophisticated and less intrusive way of helping advertisers reach potential customers. After all, the nifty little “was this commercial useful: yes or no” tab during every commercial should (in theory) combine with today’s hyper intrusive advertising algorithms to create a more productive selling environment.
The problem is that the general consensus amongst television viewers of all shapes, sizes, ages, cultures and races is united. They all hate commercials. In fact, some have argued that TiVo’s greatest asset is not the ability to record programs one would normally not be able to watch, but to simply avoid commercial nuisance and interruption.
Add in the fact that television is a highly personality and celebrity driven medium, killing off positions and scaling back salaries simply will not work the way it has in the publishing and journalism arenas. All of these thoughts and concerns lead me to wonder, is Hulu a good buy? Does it have solid legs to stand on, or will the monstrosity that is the television/advertising hydra eventually ward it off?
How would you guys go about the valuation of a company like Hulu? Especially for the mid-to-long term. We had the opportunity to see the LinkedIn IPO shoot through the roof and stratosphere recently. Now, we may be poised for a severe Web 2.0 recoil. What’s the rationale? Worse even… is there one?
Although his publicist denies it, Chappelle might come back on Netflix or Hulu (http://www.thedaily.com/page/2011/06/16/061611-gossip-dave-chappelle-1-…) Were that to happen, I would put a valuation of a trillion dollars on whoever gets his show.
A Dud, quite like yourself
Stud. We're moving towards more internet, not away from it. Internet will replace TV mainly because of the options it provides. As we keep moving closer and closer to everyone being connected by the net, I think Hulu will just keep growing. It's kind of like Yahoo! was to the start of the internet. They came in at the beginning, did good things to get it started, and now are still a big player (even if they aren't the company they used to be). I see Hulu as being something like Yahoo in the early stages, very basically speaking
Stud. The amount of commercials on Hulu are minimal compared to regular TV, plus they can more efficiently advertise so I don't have to watch commercials about tampons or other things irrelevant to me. Unlike Pandora, Hulu's already profitable and actually has the support (and investment) by major media networks. As computers/internet become more prevalent in the living room, I would expect Hulu viewings to explode.
Maybe this is pie-in-the-sky, but I don't see the TV going away completely, but rather it becoming a giant netbook of sorts. A place to surf the web, watch netflix/hulu, and tune into network television. I could see, way down the road, the only live shows being sporting events and things like Presidential debates, with everything else a watch when you want type of program. I could totally see different subscription levels getting you different access to different "channels," and what not.
The problem with this, in my view, is that it has the potential to really ruin the quality of television that gets produced. Think about content farms like answers.com and AOL's bullshit sites, they just rush to put out a ton of garbage to get page views and advertiser revenue. This is what TV could become (and is already starting to become because of DVRs and the rise of the internet), a bunch of crap created to get as much ad revenue as possible for as cheap as possible.
TheKing: Ray Bradbury beat ya to it haha. And I do believe you are right (and I agreed with Bradbury when I read his book).
And I see it happening exactly how you say it is. Except in my mind that IS TV going away completely. It's replacing the current method of getting the tv shows to consumers by switching to internet. I imagine in 20 years everyone will have an HTPC (home theater PC- which a lot of people do now). They're pretty cheap at ~$500 for a decent one and you can get hulu, netflix, torrents, anything you could get on a normal computer
stud. like Brad Pitt in "Troy" (no homo).
internet tv is a star waiting to be found.....costs consumers far less than traditional tv, Hell all you gotta do is plug in a few cables from the comp and youve got it right there on the TV. What about people that dont really want all the channels they dont watch that come with cable? With internet they can just choose to watch the shows whenever they want(far less costs than DVR) . It doesnt take much thought to figure it out that internet tv will takeover provider cable....
Dud. I've read a lot of articles about Hulu, there was a really good one a couple month's back about their CEO writing so memo about how the networks are holding back his business model.
The problems lies in content. If networks feel a site such as Hulu is cannibalizing their traditional TV medium they can pull the plug. It seems as though the networks aren't too fond of Hulu at the moment - based on the articles I've read and the sale. If Hulu was the golden goose why sell it. Control the content control the distribution. Something doesn't sit well about the decision. Overall I think their business model lives and dies by getting those rights and I wouldn't go long on them being able to get them forever.
Maybe the model will shift towards sites such as Hulu becoming content providers, such as Netflix with that new program House of Cards. The only problem with that is its really expensive to do so.
Of course tv is going to the internet, but that could take many years and we don't know exactly what it will look like. In the meantime online programming will be a supplement to traditional cable. ke18sb hit the nail on the head, content is the main problem. Google TV and Apple TV have not taken off because they can't secure good programming.
It's funny, I also read an article where the CEO of CBS says that with Hulu he is getting pennies to the dollars he is getting at the networks. The business models of the networks and over the top tv are at odds. Everyone wants TV everywhere, but that doesn't fit the traditional model of the networks. We could see a move away from networks to independent production of programs, but then who is going to spend a bunch of money to produce a show without the promise of being paid. As it is, over the top tv is way too expensive. Look at how much it would cost to buy access to every episode in one season of your favorite show.
The Dish Network-Google TV partnership looks like it could be promising. Someone mentioned this already but access to live sporting events is very important and over the top services can't event step into the ring to fight for those broadcast rights. Traditional cable and over the top services will probably merge in some way as tv goes entirely over the internet.
Like ke18sb mentioned, content sourcing is a huge issue. After Netflix scored that Starz deal a few years back, no one is going to let shit go away cheap but creating your own (quality) content is expensive. Another more long-term issue is how exactly will residuals work? I don't see physical media lasting much longer if previous episodes are available for viewing on demand but they're also a decent cash cow.
I don't think anybody's mentioned bandwidth costs yet - that is a major reason that sites like this can't really compete on the same scale as TV
Dude.....Minus the E
i think that in many ways the trend towards consuming content online rather than through traditional mediums in the television industry is analogous to the shift from physical media to mp3s in the music industry. people want to consume content online, and if the major networks decide to pull the plug on content from sites like Hulu, they will fall victim to rampant piracy. sure they will cannibalize their traditional medium, but the networks should realize how disruptive the internet is to their business and should cash in before it's too late (even if they're cashing in at lower margins). bandwidth costs are certainly an issue, but they will get exponentially smaller over time. after all, only 10 years ago something like Hulu would have been next to impossible due to bandwitdh constraints.
to reiterate my point, Hulu is a STUD. like Daniel Craig walking on the beach in tight shorts in Casino Royale (i'm not gay!).
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