
Apple to Buy Hulu?  - jedwhite
http://mashable.com/2011/07/21/apple-to-buy-hulu/
======
qq66
The problem with companies like Hulu, Netflix, Pandora, etc. is that they are
wholly dependent on media companies granting them licenses to content, and
have to accept the terms offered. These content owners basically will extract
higher and higher taxes for this content, just enough to keep companies like
Hulu in business but not enough for them to become runaway successes.

Netflix has been the most successful in getting some power in this dynamic
(reducing the demand for individual shows by not carrying current seasons,
producing their own content, etc), but all of these aggregation businesses are
vulnerable to coordinated action by a small handful of content owners.

It's like building your business on the Twitter API -- with the caveat that
there are 4-6 companies that matter (but they can act in concert).

~~~
cageface
Content companies want to commodify the intermediaries; the intermediaries
want to commodify content. It will be interesting to see who eventually gains
the upper hand.

It's getting cheaper and cheaper to build a Netflix but content creation isn't
getting significantly cheaper.

~~~
inkaudio
Well actually content creation is getting significantly cheaper. Case in point
have seen what artist able to do with small budgets and a Canon DSLR Hybrids ?
_<http://vimeo.com/groups/beyondthestill*>

Instead of looking for new talent, they continue to over pay veterans who
continue to have flops after flops, of the top my head I can think of Jennifer
Anistons and Nicolas Cage and a quick google search:
[http://www.radaronline.com/exclusives/2010/12/rupert-
everett...](http://www.radaronline.com/exclusives/2010/12/rupert-everett-
jennifer-anistons-many-flops-overlooked-hollywood-club)
[http://www.dailymail.co.uk/tvshowbiz/article-1165345/King-
mo...](http://www.dailymail.co.uk/tvshowbiz/article-1165345/King-movie-flops-
Nicolas-Cage-leaps-straight-project.html)

So the problem is the big studios and the major record labels are content with
the status quo have access to major promotional channels. Promotion is still
very expensive. Even on Youtube where some indie content creators can thrive,
the big players still dominate.

~~~
cageface
_Amateur_ content is now cheap to produce. The stuff that the unwashed masses
really want (Avatar, Toy Story etc) is more expensive than ever. Promotion
will remain expensive as long as the potential payoff is high.

~~~
inkaudio
The tech/work behind Avatar is far more expensive then Toy Story. There are
plenty of poor quality animation that pop up in films by major studios. And
there are a number of quality cg animation by students for example
<http://vimeo.com/1470875> Avatar is really an edge case, majority of the
shows on Hulu don't cost that much. For example:
[http://philipbloom.net/2010/04/10/house-season-finale-
shot-e...](http://philipbloom.net/2010/04/10/house-season-finale-shot-
entirely-with-canon-5dmkii/)

The finale of a popular show was shot using the Canon 5Dmkii. A camera many
amateurs are using to capture their content. There are some stories that are
best told with the big tech and budget of major studios, but like I mentioned,
in most cases, the cost of promotion and over paying for hyped talent is
keeping everything they do very expensive.

------
jsz0
Hulu or no Hulu Apple does need to re-think how they sell video. The important
difference here is Netflix and Hulu can replicate the beloved channel-flipping
experience with a new twist. The reason people pay outrageous cable/satellite
bills is they want that safety blanket of never running out of _something_ to
watch. Both Hulu and Netflix offer that. iTunes really doesn't unless you're
willing to pay al-a-carte prices and most people are not. Apple needs to offer
both the pay-per-view content for new release movies, early-acces movies,
premium TV shows, while still offering the all-you-can-eat channel flipping
safety blanket that people seem to want.

This would get Apple pretty close to being the cable/satellite killer. Premium
TV content, new release movies, all-you-can-eat selection, sports (NBA, MLB,
NHL at least) and probably apps to cover the live streaming so the programs
could have interactive features (which is increasingly becoming the only
reason people watch live TV) I think they're very close to figuring this one
out.

~~~
jianshen
_safety blanket of never running out of something to watch_ is spot on.

I'm in a hospital waiting room and people are all staring at the Game Show
Network not really caring what is on but just that _something_ is on. None of
the big streaming services currently provide that kind of experience in my
opinion...

------
ChuckMcM
Articles like these have little credibility with me. They are like those
things you see in the checkout line with headlines like "Aliens Meet with
President."

The speculation is all over the map, the 'players' are random, and nowhere is
there any sort of actual financial analysis of whether or not the speculation
would make sense.

------
briggsbio
I actually see a lot of positives here, but certainly some negatives. And also
I have some thoughts on how it makes (or doesn't make) sense for Apple to snap
up the alien-wrought 'cable killer.'

Pros:

\- Apple doesn't "need" the Hulu revenue (as does an independent Hulu or
Netflix or Pandora...), giving it leverage in content deal negotiations. Or,
Apple could allow it to be a loss leader to get even deeper into the media in
our lives (they certainly have the deep pockets to ink deals favorable to the
cable giants if need be, with negligible impact on their ~$80B Warchest). What
was the precedent in the deals with the music labels to get them to put their
content on iTunes?

\- People look at wireless carriers and cable megaliths with similar
passionate disdain. And rightfully so. Apple has shown an unparalleled ability
to bend carriers to their will. I would love to see the cable giants squirming
on Apple's hook. They are, in my opinion, the ONLY acquirer with the muscle to
keep the cable co's in their place. I can only imagine the calamity of Carol
Bartz negotiating with the cable giants as those guarantees expire.

\- It is quite possible that Apple as a company is the toughest negotiator out
there right now. This stems from their mindshare and market power, or maybe
it's just Steve's giant adamantium balls. (see points 1 and 2)

\- The litany of commercials (even if you pay) and user experience issues with
Hulu drive me nuts. Possibly no one better to right that ship than Apple.

\- They could relaunch Hulu alongside a subscription music service. Hey, it
could happen.

\- In an unrelated note, I just want to watch Steve Jobs kick Rupert Murdoch
in the teeth.

\- Exclusivity on a streaming TV service like this would be a big leg up over
Google in the Android/iOS battle. It may not be a bellwether in device
selection for the HN crowd, but it may well be for the rest of the world
(sorry, I just can't call them "normals" anymore, it's sounds borderline
derogatory).

Cons:

\- Will spark antitrust review/inquiries, but not enough to prevent it from
going through. APPL/MSFT/GOOG can't piss without Christine Varney there to
record its volume, color, and aroma. She'll be gone next month, but there will
be an equally odious character to fill her seat at the Justice Department.

\- This could be bad for consumers. While I would love it initially, if the
cable co's ever do get the upper hand, it would really piss me off to cut my
cable and have the content suddenly get shut off because negotiations went
South. Minor annoyance, sure, but still.

\- This could be really bad for consumers. How deep into our media consumption
is Apple going to get its fingers, nay, tentacles? Are ticketmaster and AMC
theaters next? Apple is filling more holes than, well, let's just say than
some of the actors in the one content category Apple has shown an
unwillingness to jump into bed with.

All in all, like most things Apple does, it could be awesome. But it will no
doubt leave a bitter aftertaste whose origin you just can't explain.

Oh, wait. That's the taste of the forbidden fruit in Steve's great walled
garden. You always wondered why he named it "Apple." It tastes great, but
there's always a price to pay.

------
bradly
I think what Apple would really be buying is the 5 years of access to the
content with the 2 period of content exclusivity. I can't imagine Apple
running the Hulu product as it is currently.

~~~
digikata
Exactly, I don't think anyone would look at Hulu for either the technology or
the brand recognition. It's only value would seem to be the content; and that
must come up for periodic renegotiation. That must really cut into Hulu's long
term value.

Of all the potential buyers though, I'd see Apple as having among the best
bargaining power and negotiating knowledge to get reasonable terms for the
content.

------
bdhe
I was just curious about Apple's mergers and acquisitions, which lead me to
this[1]. Interestingly Lala.com at $17MM is much smaller than recent
acquisitions; they spent $250MM for Quattro Wireless and $121MM for Intrinsity
semiconductors. They also spent $278MM in '08 for P.A.Semi, another
semiconductor company.

[1]
[http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...](http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple)

~~~
ComputerGuru
Well, you can't really compare _hardware_ companies and their factories to a
startup!

~~~
18pfsmt
The semis they acquired were fabless, meaning, they had no factories but
relied on the likes of TSMC.

------
nextparadigms
Because of its ad based model, Google TV, and now Hangouts/Google+, I think
Hulu would be a lot more suited for Google than Apple. Google is probably the
only one that can make Hulu international, too, because even if US advertisers
don't want to advertise outside US, Google could still use their own ads for
videos/Youtube on Hulu as well, and at least get _some_ revenue to break-even.

Apple would have to turn Hulu into Netflix, and I don't think they can catch
up to Netflix that quickly. And why would Apple want to charge just $10 a
month for all-you-can-eat subscription, when they haven't even done so for
iTunes.

~~~
ansy
Nobody can take Hulu international unless they acquire the respective
licensing rights for that country.

To explain, content creators figured out a long time ago they got more money
by selling rights to content as specifically as possible. This is by region
and format. So United States is separate from Canada. And the DVD distribution
rights are separate from theatrical distribution rights which are separate
from the online streaming rights.

This is how Netflix was able to offer online streaming so cheaply. It could
secure the online streaming rights to shows for pennies on the dollar because
nobody else was even trying to buy them. Everyone was bidding up TV rights,
DVD rights, and theatrical rights.

So going international has nothing to do with what advertisers want. It has
everything to do with paying content holders separate license fees for every
single country on earth for every show in Hulu's catalog.

That's a monumental effort without even mentioning each country's broadcast
laws which can be byzantine to say the least.

------
threejay
I think the Apple TV is getting a lot closer to a cable killer than most
people realize. Slowly but sureley all the pieces are falling into place. Hulu
+ Netflix + MLB/NBA Apps + ipad mirroring (cnn, nbc, abc, hbo, etc apps) is
almost as good as cable for a fraction of the price.

------
programminggeek
Apple certainly could, then again, Apple would probably shut down the whole
Hulu Plus strategy and make Hulu part of iCloud. That feels very un-Apple to
me.

Even if Apple acquires a company, it is usually for technology to integrate
with other Apple products, not for someone else's product, so I don't know why
they would buy them.

Also, with Apple's deep pockets it would only make sense if the exclusive
content was cheaper buying Hulu directly than making a deal with the companies
behind Hulu. Exclusive or not, money talks and Apple can probably buy out Hulu
exclusitivity if needed.

I dunno, Apple + Hulu doesn't seem like a great fit. Google + Hulu sounds like
the most realistic scenario to me.

------
smackfu
What is the Apple approved solution to DRM video?

------
molecule
apple will merge it w/ a previous media-tech acquisition and spin that off as:

hululala

~~~
aaronbrethorst
Hula Hula?

