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.
> 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.
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.
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".
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.
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.