Buzz Watch: Hulu.com Looks Great and the Strategy Behind It is Right On

Authored by Jay Baage on October 31, 2007 - 9:02am.

Hulu.com, the joint venture between media giants NBC Universal (NYSE: GE) and News Corp. (NYSE: NWS), is an effort to bring the game to their own playing field after online viewers have moved to sites such as YouTube (NSDQ: GOOG ). Will it succeed? Well, for starters, it certainly looks great and it has debuted to positive reviews in the press (here is a review from my fellow DMW writer Scott Goldberg). Take a look at the full-length version (!) of the classic movie “Breakfast Club” here.

So, what is the business model? Hulu will stock up with high-quality video content from as many sources as possible, starting with hit NBC and Fox shows and a small sampling of movies, all with one-quarter the commercial minutes of regular TV. Ad revenue will be split among the owners of the shows, the Internet distributors and Hulu.

The service recently launched in a test ("beta") mode, and the company is allowing a limited number of people to apply for access the site as it works out the kinks. And there are kinks. For example, those who tried to log on around noon PST received the following message: “system is down for maintenance.”

However, from what I have seen, the service is impressive and the thinking behind it seems to be in line with how video will be consumed in the digital age (which is a big step for the big media companies involved)

Most the most part, the big four TV networks have been reluctant to put their content online out of fear that it will "cannibalize” the business models that have been so profitable for them in the past. When they have put original content online, they have kept to free, ad-supported shows on their own websites and hoped that their brand names were enough to attract viewers.

However, the thinking behind Hulu is different. The service will syndicate its shows to the most popular destinations around the web as well as allow viewers to embed streaming clips or entire shows on their blogs.

"No one in the industry has taken that step," said analyst James McQuivey of Forrester Research to the LA Times. "I doubted they had the political will."

I must say that I doubted it too, but welcome the move with Hulu as a step in the right direction. Finally it seems that the future of television is taking shape. Now I’m just waiting for more original high-quality content produced exclusively for these new platforms.

Joakim Baage

For those of you interested in this topic, be sure not to miss our upcoming Future of Television Conference in New York City on November 8-9. I also wrote a chapter on this topic in the consumer marketer sourcebook “Millennials and the Digital Entertainment Age” called “From MTV to MySpace: Keeping Television Relevant To Millennials.”

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