
Yahoo submits bid for Hulu - jmduke
http://allthingsd.com/20130524/yet-another-hulu-bidder-yahoo-is-in-too/
======
bernardom
Holy cow. This is a _big deal_.

There is no reason why TV networks need to exist the way they do. Hulu,
Netflix and Amazon all produce original content and are perfectly positioned
to disrupt them as their distribution volume increases. Even the current
distribution channel is being disrupted by Aereo. Hulu is a a huge asset.

If Yahoo gets in this game, they have a massive number of users, photos
(flickr), blogposts (tumblr), mail, content... they're rivaling the reach and
diversity of Amazon and Google as content owners (though without their
respective cash cows of b2c sales and ads).

What's next? Is there some sort of connection that I'm missing between flickr,
tumblr, the existing yahoo platform and hulu? Do they buy vimeo from IAC, or
buy/merge with IAC? What's the strategy behind all the acquisitions?

~~~
criley
> _Hulu, Netflix and Amazon all produce original content and are perfectly
> positioned to disrupt them as their distribution volume increases._

Uhh, as a Hulu subscriber, I'll just let you know: If I only had "Hulu"
content to pick from, I'd cancel my subscription immediately. It's not great
stuff, barely worth paying for and CERTAINLY not worth both paying for and
sitting through the same 4 advertisements over-and-over-and-over again for.

Basically, I don't care who owns Hulu, but if Hulu isn't getting next-day
network television + back catalogs, then I'm not going to subscribe. That's
what I want it for, and I imagine I'm not the only one.

~~~
glhaynes
_sitting through the same 4 advertisements over-and-over-and-over again for_

What is it I don't understand about the online video business that causes this
to happen? They can't get enough advertisements from their partners to allow
them to be less repetitive? Advertisers don't want to provide variety? (Maybe
advertisers specifically _want_ the monotony? Surely not, else they'd follow
the same scheme on network TV.) The endless repetition sucks to watch and it
makes the whole thing seem amateurish.

~~~
espadagroup
Hulu's CPM's are incredibly high, on par with prime time TV. Not that many
companies advertise on TV at those rates; even fewer do so online.

~~~
glhaynes
Huh. OK, then it surprises me that they charge so much. I guess they're
selling their ad space, though? (Hence it being sensible for them to charge
such a high CPM rate.)

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marcamillion
Wow....I feel like I am watching a brilliant game of chess. Marissa Mayer is
increasingly showing her genius.

It is clear that she understands that Yahoo is a New Media company. They serve
assets to many eyeballs and monetize those assets.

It seems that in her case, their main goal is grab up as much quality
inventory as she can, and monetize the hell out of it.

As their media inventory gets bigger, economies of scale start to kick in.
Nike may not want to just advertise on Yahoo & Flickr, but they would be
damned if they turn away the potential to reach audiences in Yahoo, Flickr,
Tumblr, and now possibly Hulu. Plus I imagine that the more inventory they
hold, is the more they can package that inventory to increase the unit price
for all properties.

Holy crap....this is brilliant and yet so obvious. Why have other CEOs not
grasped this and executed on it the way Mayer is.

I think this is the one of the few cases, in Corporate America, where going on
an M&A spree makes the most sense.

Another thing is the more properties she buys, and the better deals she does
is the easier it is to buy other deals. Startups loved being bought by Google
because YouTube was bought by Google. The same thing is starting to happen.
Yahoo! bought Tumblr, so other companies are going to feel comfortable being
bought by Yahoo! and that will create more deal flow, resulting in more deals.

Hrmmm...I wonder how much cash Yahoo has on their balance sheet - either way,
I am sure they can raise a ton of money to do more deals.

WoW....just WOW!!!!

~~~
untog
Is "buy lots of big properties so you can advertise across all of them" really
CEO _genius_? It's something that Yahoo was doing for years before Meyer even
came on board- they bought Flickr and Delicious, and tried to buy Facebook.
Granted, none of those were hugely successful, but we're still yet to see
whether Tumblr and (maybe) Hulu will be.

I'm not sure that buying Hulu is such a slam-dunk, anyway. They are entirely
at the mercy of the TV networks- if they pull content, Hulu is worth very,
very little. People use Hulu largely because they have to.

~~~
austengary
I think the genius will instead lie in her plan for internal consolidation for
the two platforms to converge in harmony as complementary.

Taken together the two most recent poaches (i.q. provided Hulu) have much
crossover especially while accounting for further past acquisitions.
Amalgamating successfully will position them as key content provider in the
market.

~~~
marcamillion
That last sentence was so full of businessy-speak....I have no idea what you
meant to say....and I am an MBA!

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kevinalexbrown
Can anyone explain why Hulu wants to sell to a third party? I understand
there's infighting according to the article, but it's unclear to me why one of
the owners doesn't buy out the rest. Is there some general principle behind
not selling to your competitors and choosing a party currently without a huge
stake in television or movies like Yahoo? I'm curious about both reasons
specific to this particular deal and general principles behind selling to
third parties.

~~~
Retric
It's all about licencing.

"In 2011, Hulu’s owners put the company up for sale and were looking for a bid
of at least $2 billion; in exchange, they would offer content licenses that
would run for two to three years."

"Last month, former News Corp. COO Peter Chernin submitted a starting bid of
$500 million, with the understanding that he would be willing to pay more for
extended licenses."

Basically, a huge chunk of Hulu's value is having a wide selection of content.
At the same time the people doing the highest value licencing also own the
content. Right now they can play an accounting game and lower the licencing
costs to make it look profitable sell and then raise their licencing costs.
Effectively it's the same money because they own the company as long as all
the owners agree to a sweetheart deal. Unfortunately for them they are having
some issue deciding just how much everyone should discount there content to
make Hulu look better. However, nobody got suckered into there 2 billion
dollar shell game.

~~~
samstave
I have had a Hulu account for the last two years. I recently canceled it.

Their content is actually not that good, and on top of it, you're forced to
watch commercials as well. The service was terrible.

~~~
Moto7451
I've never understood why people dislike the commercials so much.

Most of their half hour (21 minute) shows only contain at most three minutes
of commercials spread through the show. At worse you're sitting through a
minute break from the show.

People pay $100+ per month and seem to live through tens of minutes of
commercials per show.

Plus is about having device and HD access more than anything. I like it as I
get far more content from it than I can over the air and I refuse to pay
$60-100/month for cable/satellite.

~~~
veidr
Ignoring the obvious "I don't want to watch fucking random useless shit in the
middle of something I am enjoying," there is another reason: commercials
create mental pollution that in some cases never goes away.

For instance, I still have the jingle of this horrid local low-budget
commercial from KFTY TV 50 (UHF broadcasting out of Santa Rosa, CA) in my
brain: "♫ Auto body masters... _EuroCal_... ♫ Auto body masters...
_EuroCal_...".

I was fucking _eight_. It's been _thirty fucking years_. And yet that crappy
little jingle for a company I never used still bubbles up to the surface
sometimes, in the shower or in the subway station. We all carry around these
little worthless turd fossils in our heads. I noticed my friend humming
McDonalds' _I'm lovin' it_ to herself as she worked just 20 minutes ago.

Gross.

~~~
VMG
So if you hadn't seen the commercial, what else would be playing in your head?
Mozart?

~~~
AlexDanger
Perhaps not Mozart, but anything is better than a fucking jingle.

I havent seen a TV commercial in years.

We live in a world where we are constantly bombarded by information. Some of
it stick to your brain whether you like it or not. Presumably the brain has a
finite amount of bandwidth for processing/retaining incoming information. With
that in mind, I'll do my best to avoid commercials so something from the
'useful' information streams has a better chance of sticking.

Or perhaps my brain will latch on to some other useless information. But thats
ok, because adverts are the fucking bottom-feeders of the information ocean.

Commercials didnt use to annoy me that much. But for the last three years I've
consumed all my TV via Netflix and online video, commercial free. Now I find
commercials unbearable. Sometimes I even get angry - how dare they interrupt
my immersion and enjoyment of a story? Imagine if you were reading a book and
every 5 minutes some obnoxious advert interrupted you? Thats how weird it
feels.

~~~
VMG
When I watch TV, adverts fascinate me as a study of society. I'll admit that
the enjoyment drops off after the first time though.

But are TV adverts really more "mentally polluting" than a 80s song or a
limerick you picked up at a schoolyard? Relax everybody.

~~~
AlexDanger
_adverts fascinate me as a study of society_

Thats a nice perspective, I might try that. The science of advertising is also
interesting - these marketers spent squillions of research dollars on figuring
out the most effective technique to transfer an idea/emotion/brand
(essentially a meme) to your brain. Those techniques are also applicable to
giving a presentation for work and public speaking. I've noticed the most
successful people in the workplace are those who can 'sell' their ideas to
their colleagues and managers.

 _But are TV adverts really more "mentally polluting" than a 80s song or a
limerick you picked up at a schoolyard?_

For the most case I think you're right. There is a subset of more evil adverts
which attempt to play on insecurities (body image, gender
roles/responsibilities, medical fearmonging). But most advertising is
just...transient noise. Never attribute to malice what can be explained by
banality.

I have a pet theory that our brains will retain a certain amount of useless
'mental pollution' regardless of what information streams are being thrown at
it. Not because we need those little nuggets of useless information, but
because they are implicit to the formation and recall of other 'useful'
memories and emotions. Memory is a multi-sensory thing, regardless of what
part of the memory is 'useful'.

Music is a special case, its ability to trigger episodic memories is very
strong[1]. I like to think of it in computer science terms as a hash table[2].
If you spend enough time doing a certain thing whilst listening to the same
music, the event is stored against the hash (music). Then in the future,
listening to this music will trigger a _very_ strong memory of that time in
your life.

I spent many hours as a teenager listening to music whilst playing video
games. Now if I listen to these albums, the memories instantly 'come flooding
back' as the saying goes.

[1]I believe olfactory triggers are stronger than auditory triggers. Perhaps
smell-o-vision advertising is the next big thing.

[2] Not a great analogy - the linking and recall is really bidirectional.

------
arkitaip
I think one potential positive outcome of all these acquisitions and rumours
of acquisitions is that devs are once again seeing Yahoo as an interesting
place to work. When you got so many in-shop startups working on interesting
stuff, great things can happen beyond figuring out how all the individual
acquisitions can fit together. Provided, of course, that Yahoo knows how to
properly nurture the startups and their culture.

~~~
camus
Whatever,management has not changed, the culture has not changed. Yahoo is
just on a buying binge, until it runs out of cash. Mayer will have to fire
half the current work force to make up for this or will be out in a year.

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gcb0
whoever buys Hulu is going to regret when they find out all the content deals
goes up in smoke when the company change hands.

~~~
jcampbell1
The content deals they currently have in place are so one-sided that there
little to be gained by owning Hulu. Their contracts are basically, you get a
license to the content, but 95% of any revenues you generate must be given to
the content partners.

The whole point of Hulu was to stop piracy and return any cash generated to
the content providers, not to be a profitable ongoing business. I don't even
know what it means to buy a company that must funnel all revenues to content
providers. It seems like Yahoo is bidding on something they won't actually
control.

~~~
jfb
Yeah. Hulu is 100% a creature of the content owners. It's not a business. What
would anybody be buying? The brand?

~~~
chollida1
The advertising stream? I've never seen Hulu but there would be a lot of
chances to show ads on it I'd imagine.

And yahoo is a company with alot of add inventory!

~~~
waterlesscloud
Of course, the whole point is that most of the revenue from the ads goes to
the content providers, not to Hulu.

Still, you can imagine a scenario where Yahoo signs an ad deal with say
General Motors for an overall package for all their properties, and then
throws in Hulu as a bonus.

Keep the ad rates at Hulu at whatever minimum is written into the content
deals, but use that as a bonus/loss leader for the real money that's allocated
to advertising on the other Yahoo properties.

Might work.

------
jgalt212
First Marissa buys Geocities and now she's making a play for Broadcast.com.

------
ljd
Out of all the names on that list William Morris Endeavor is the most
surprising.

The agency model in Hollywood will eventually fade away because middle men
don't offer as much utility as they once did when information wasn't so
readily available.

It's surprising to see any of the major agencies waking up to this idea and
acting on it.

If WME wins the bid we could see some interesting changes in the entertainment
industry.

If actors, writers and directors (talent) are only a single step away from
creating content in an environment where distribution has very low variable
cost then we could see a boom of high quality independent films and shows.
Think House of Cards (Netflix US) on a more frequent basis.

~~~
swampthing
In the case of WME, they are 1/3rd owned by Silver Lake, so some
sophistication in this area isn't surprising:

[http://dealbook.nytimes.com/2012/05/02/silver-lake-takes-
sta...](http://dealbook.nytimes.com/2012/05/02/silver-lake-takes-stake-in-
william-morris-endeavor/)

I don't know about WME, but CAA also has a small venture arm.

~~~
ljd
I used to work at CAA and there are a few agents aware of a bleak future for
the agency model but to be honest no one wants to face the music over there.
Their investment arm is for tech and entertainment startups, I doubt they
would use it for Hulu. A Hulu acquisition would require their Silverlake
equivalent, TPG. I'm all for it, but trust me when I tell you that I doubt CAA
will put a bid in on this.

They are so far ahead #1 that they can't see it. It's a classic innovators
dilemma problem.

------
jjoergensen
Yahoo is the new Lycos. Lol. They are just buying a lot of stuff wihout a
strategy and focus.

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kunle
"In 2011, Hulu’s owners put the company up for sale and were looking for a bid
of at least $2 billion; in exchange, they would offer content licenses that
would run for two to three years."

Given that Hulu is now owned by the folks who license its content, any new
buyer/owner can expect to pay astronomically more (think of what happens to
Netflix every few years as they license content) or lose access to content
every few years. Essentially, the owners would sell you the company and retain
the option to put you out of business. It's a really bad deal.

~~~
camus
well some people callit genius , go figure ...

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kenshiro_o
Can someone tell me where Yahoo gets all this money from? It's not like they
have pockets as deep as Facebook or Microsoft! Although I believe I do
understand part of their strategy (having a foot in every type of medium), I
have concerns about how they will integrate all this content and users into
the Yahoo ecosystem. It is certainly not going to be easy work and the
acquisition is the most straightforward bit. I really don't know what to think
about this move. It seems a bit premature though.

~~~
e1ven
Back in the day, they bought 40% of Alibaba, which has done VERY well. Selling
back this stake has raised a lot of money.

------
616c
I see a lot of people down the thread complaining about advertising and saying
how it has become a normalized part of the experience.

I tried scanning the thread, but ironically more knowledgeable people have not
mentioned cable television did not originally have ads; at least one of my
parents said this was the appeal of premium cable at its inception. Wikipedia
kind of confirms this in several places, but does not discuss the history of
ads on cable TV specifically, which I would want to read more about.

[https://en.wikipedia.org/wiki/Cable_television_in_the_United...](https://en.wikipedia.org/wiki/Cable_television_in_the_United_States)

So, keep in mind it is the lazy or indifferent among us who let them get on
cable in the first place, so surprise surprise Hulu and other content
providers are not going to diverge from the inertia of greediness set by their
industry decades ago.

Also, not to defend Hulu, but they tried a lot of experimenting with fronting
the ads in blocks so you can watch shows interrupted. I respected they made an
effort, and they need to show with ad revenue and subscriptions (just like
cable companies and satellite providers before them) they can use these models
_on the web_ to turn a profit. I actually considered Hulu subscription, even
if it is garbage, because supporting legit streaming content in any form is
the only way to drive it home to these morons in the entertainment industry
that I want internet-based services, not DVDs, movie theaters, set-top boxes
with encryption cards, etc.

------
PLenz
Ok - at this point I'm wondering just how much Yahoo thinks it can swallow as
a company. Tumblr -by itself - is going to take months to integrate into the
Yahoo ecosystem. And now they want Hulu? I'm really wondering if they are
biting off more then they can chew.

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iuguy
I think this is a smart buy. Buying netflix would be stupidly expensive, but
buying Hulu and changing it to out-netflix netflix could be a really good play
to pick up a platform fairly cheaply and run with it. The question is whether
or not Yahoo! has the dynamism to do that, and I'm not sure anyone other than
Marissa Mayer has the answer, if her.

Here in the UK, iPlayer dominates the online market. If she can come with a
paid for equivalent getting things like Game of Thrones and original content
on the level of house of cards, Yahoo could really challenge that.

~~~
johneth
The UK market is probably one of the most 'advanced' in terms of online
viewing of TV and movies (thanks in large part to the popularity of the
iPlayer).

There's a mix of things; multi-platform free VoD (iPlayer, 4oD, ITV), multi-
platform subscription VoD (Netflix, Blinkbox, Lovefilm), subscription live
stuff (Sky).

I would credit the BBC with spurring on this competition - they've expanded
the mindshare for these kind of products with everyday people probably more
than any other company. They're not really competing with the other players in
the UK, though.

A new player would be competing with the likes of Sky (who own the rights to a
load of premium stuff, which wouldn't be up for grabs for a long time, and
when it is, would be fought for). Netflix has this problem right now with
movie and TV rights.

------
pdevr
There is a strategy behind this - Tumblr, now Hulu. She is acquiring content
generating properties. Whether it will succeed or not remains to be seen, but
kudos to her for trying!

To those who say it has been tried before by other CEOs: Flickr and Delicious
generate pictures and bookmarks. Pictures and bookmarks have pathetic
monetization rates, compared to articles/blog posts. With Hulu, it gets better
- awesome paid subscription rates, along with monetization via advertising.

------
jarjoura
Yahoo is trying to acquire so many companies, I fear they are only going to
run into culture problems as they begin to assimilate them into the parent
company over time.

Just look at AOL as the model company that did this in the late 90s and early
2000s. They broke so many companies they acquired and it only hurt AOL.

Google and Facebook have been successful at it because they essentially used
it as a way to hire smart people who wouldn't have interviewed with them.

------
ipsin
My two biggest complaints re: Hulu are

1) "web only" content licenses. Nevermind that they really mean "PC only",
it's a confusing user experience to pay for a service and have content
selectively unavailable. I think that this is mostly Fox's fault.

2) choppy ad serving. Video serves very consistently, but ads are prone to
pausing, stuttering and other buggy behavior.

------
androidb
I hope they buy it and open it for international users as well, it's a pity
right now it only works in the US and you have to resort to tricks to access
it from outside the US (for those interested here's a chrome add-on that lets
you access it from outside the US - 'Media Hint').

------
mark_l_watson
I don't really understand how this would work because I thought the secret
sauce of Hulu was that the networks owned Hulu, so they allowed their content
to be on Hulu. If Yahoo buys Hulu, do they still get the network content?

------
mohoyt
Hulu has too many vowels to be a Yahoo acquisition. It just can't happen.

~~~
lanstein
y is a vowel sometimes ;)

------
salimmadjd
Looks like Marisa is following the Google recipe. Blogs, Videos, Photos
(improving flickr), now they just need a real mobile product and a social
network.

~~~
samfisher83
60% of google's revenue comes from search. You can't be google without the
golden hen and yahoo doesn't have search.

~~~
salimmadjd
Content discovery is moving away from search. If anyone would know that it
would be Marisa. Perhaps she is positioning the company for 2-3 years down the
road. Which means she needs more social component to yahoo beyond tumblr.

------
ywang0414
What's the value of Hulu to Yahoo besides trying to buy itself into the cool
kids club? What is Yahoo these days anyways? Search? Content aggregation?

~~~
kolbe
Yahoo is its Alibaba stake. No more, no less.

------
jpatel3
I think Vimeo might be better acquisition than Hulu.

~~~
randomfool
Agree. It seems much more complementary to Flickr, and avoids all of the
negotiation with the networks that any deal with Hulu would entail.

This article is a leak, the question is by whom, and to what purpose. The
cynic in me says that Yahoo made some lowball offer and Hulu leaked it to try
to drum up more interest.

------
yarou
Another example of acquisition frenzy by Marissa Mayer...already priced in,
especially in this market of asset inflation.

------
anoncow
If yahoo makes it back to the top, it will be a coup of sorts.

I might be rushing it a bit, but we need competition at the top!

------
negamax
Marissa Meyer sure likes shopping.

~~~
lowglow
Nominated as HN's best/worst comment of the day. <http://on.fb.me/10Yo7An>

------
orangethirty
Seems yahoo and Google are competing to be the ne AOL.

------
frostnovazzz
Yahoo! is showing us what a new media company is.

------
lettergram
Seems the new CEO is hard at work

------
edandersen
"Yahulu", then.

------
yoster
I tried Hulu multiple times with their free month offers. It sucked so bad
that I canceled before I had to pay for a subscription. I'm sure people love
Hulu, but I am definitely not one of them.

~~~
legitsource
It burns me to pay a subscription and still have to watch advertisements.

It burns me even more that the ads are so repetitive.

~~~
kbenson
How is that any different than cable/satellite?

