Why Hulu’s Owners Couldn’t Find A Buyer
techcrunch.com
techcrunch.com
"We're going to sell you a company with assets which vanish in two years, after which time, you have a company with no assets and the right to negotiate for the right to use of the aforementioned assets at a price to be determined by us."
Yahoo may exhibit tremendous inability to derive value from acquisitions, but not even they were willing to take this time bomb.
So what do you do with a very popular but strategically dead product? Sell high is what you do. At least that's what Comcast and Disney wanted to do with Hulu. New Corp's streaming offering isn't quite as mature, so it was fine keeping Hulu for a little bit longer.
The same thing happened with Netflix. What do you do with a popular but strategically dead product like the DVD rentals? Sell high, sell high.
Netfix's DVD business is worth something. Hulu is worth something. They were just hoping it was worth more.
The next revolution in the media industry will be brought about by the ability to produce high quality, low budget content.
Things like the RED camera, HD video capable SLRs, point and click video editing software, easy access to compute farms are pointing to a future where video content will be as easy to produce as back in the 2000's where anyone could just put up a webpage with the tags <html></html>.
You can already see it happening and that is what has the old content producers scared.
Can't see that happening as the public directs most of their attention to the professionals. On the other end of the spectrum, all of the talent and creativity go where the money is.
The production values might not be as good, and there will be a heap of terrible content produced, but there will be some hits.
This means if something is a blowout hit then it isn't the studios pocketing the money. The barrier to entry to a "professionally" produced show is a studio, good cameras, good editing, lighting, etc.
Think about how much cheaper all that has become.
The issue is that the three owners (Comcast, Disney, News Corp) provide the most popular content on the service. In order to become a truly independent platform, Hulu needs to beef up its offerings so that the loss of any individual content partner would not be a big deal.
They are not there yet, though they are moving in the right direction with Hulu Japan, the Univision deal, etc. As of now, however, the major content partners still hold a large amount of power and the potential buyers saw this from miles away.
Absolutely correct. The main thing is that the only viable independent platform, Netflix, has had serious difficulty maintaining agreements with content providers. That adds a lot of risk and uncertainty for prospective investors of an independent Hulu.
If they push the price too high then Netflix has the money to go directly to the production houses and buy shows themselves. I know they are experimenting with this now, but it is a model that will become more and more attractive.
You bring up a good point about Netflix/Hulu going direct to buy their content. I think we are seeing early signs of this, but it has been taking time to gain traction. Some of the early Hulu exclusives such as "If I Can Dream" were epic failures. But there have been successes as well, such as "The LXD".
The fact that some of Netflix shows failed isn't really relevant - the fact they commssioned them at all is the thing that should have content providers worried.