e-shock 2020 by Michael de Kare-Silver

Author:Michael de Kare-Silver
Language: eng
Format: epub
Publisher: Palgrave Macmillan
Published: 2010-12-31T16:00:00+00:00

Media

In the media sector, looking at Hulu provides a good overview of many of the challenges media owners and content providers face.

Hulu provides TV content and programs for free, online. Its revenues come from pre-roll and side advertising. Its aim is to be the YouTube equivalent for TV programs. It launched in 2008 and quickly became successful, pushing revenues up to $150m and securing content partnerships from the likes of Disney, NBC Universal and News Corp. But in a world where content online has now quickly become available for free from many alternative places and on other different access devices, and without ad interruption or delay, Hulu’s owners are already concerned about the long-term viability of their own specialist ad-funded business model. What started out as unique is rapidly becoming common place.

Some of the content provider partners such as Disney want to start charging for their content either by way of subscription or on a pay-as-you-go basis. Others don’t want to be tied in only to Hulu and want to make content available in other ways, for example, for the Apple iPad.

As a result, something that had quickly proven to be a success may well tomorrow become a falling star just as quickly, as the online content access environment changes rapidly. Catch-up TV, connected TV devices, the Apple iPad and the emergence of other free online content platforms are undermining Hulu’s early market leadership. The Hulu CEO has commented that Hulu is a trail-blazer and that it is prepared to blaze another trail, even if it takes a bit of time.

Hulu has started to respond with Hulu Plus, which is an online paying subscription service giving access on internet-connected TVs and portable devices like the iPad. But this is a major departure from its “free content” theme and starts to compete directly with a new and established set of other subscription-based services. Netflix, for example, had revenues of over $2bn in 2010, is generating high levels of profitability and has become the default provider of video content whether from TV or film. It does charge a subscription so it has established a way of pricing for the industry. But why would a consumer switch to Hulu when Netflix provides a bigger archive of material, is widely advertised and has locked up partnerships with the big guns like Google TV?

Hulu is facing transformational change from all sides, even though the company itself was regarded as a pioneer of the digital revolution at the time of its launch just a short while ago. Catch-up TV players are now easily and widely available for free, online, interactive, net-based TV has been launched and will be ramped up, the iPad and other tablets allow for easy remote download and access of TV and movie content, Google, Apple, Sony and other big guns are muscling into this arena … not a good time for Hulu to start another round of fund-raising!

Meantime behind the scenes, TV broadcasters themselves are in a mild state of panic. The

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