
Why Hulu’s Owners Couldn’t Find A Buyer - aaronbrethorst
http://techcrunch.com/2011/10/13/why-hulus-owners-couldnt-find-a-buyer/
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VengefulCynic
The most puzzling part of this to me is that the content studios honestly
thought it would work.

"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.

~~~
ansy
I think the idea was that none of the Hulu partners felt a real need to keep
Hulu around. The Netflix threat has been thwarted. Enough providers have
turned against Netflix it can't stand on its own anymore. Everyone with
content is instead building its own segregated streaming service around
proprietary content.

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.

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rottendoubt
If I were Google, I would have done it. Offered $2B and taken the 2-year deal
with Hulu. Match it up with YouTube, grow it as big as possible, and
completely dominate online video to the point of creating a monopoly. At that
point, you'd have leverage to negotiate with the studios -- yes they have the
content, but you'd have the distribution (think iTunes and record labels). If
they don't deal with you and try to launch something separate, they'd have no
traffic. And there'd be no real competition on bidding from third parties as
they'd likely already have been wiped out by the YouTube/Hulu combo.

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jtchang
I keep being reminded of the cliched statement: content is king.

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.

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omarchowdhury
What exactly are they scared of? Amateurs taking over professionals?

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.

~~~
nl
Not amateurs taking over - a new set of professionals, doing shows cheaper and
quicker.

The production values might not be as good, and there will be a heap of
terrible content produced, but there _will_ be some hits.

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jimbobob
This is not surprising news to me.

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.

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sc68cal
> 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

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.

~~~
nl
The content providers are playing a dangerous game though, and it isn't clear
they recognize it.

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.

~~~
jimbobob
I think they do recognize it by this point. I think the pullback of Starz! was
a key sign of this... the content providers were not comfortable handing
Netflix so much power.

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".

~~~
nl
I think they have recognized the power Netflix has, but the withdrawl of Starz
was overplaying their hand. That's going to push Netflix down the road of
commissioning more shows themselves earlier than they need to. It's also going
to encourage other, new content providers to enter the market.

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.

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Hitchhiker
The reason is here somewhere..

<http://www.sjtrek.com/trek/rules/>

