Hulu: Who Knew?
OK, bad pun.
But the rumors suddenly swirling around the potential sale of Hulu to an as yet (as of this date) unnamed suitor reveal a deep and ongoing generational chasm between old media and new media. Sadly for old media, while we all understand how tough it is to turn a supertanker around, Disney, Comcast and News Corp selling their stakes in Hulu is exactly the wrong move at the wrong time.
Hulu CEO Jason Kilar raised eyebrows earlier this year by stating, with deserved pride in the Hulu blog, that Hulu's advertising model was both more targeted and therefore more effective and value-driven than conventional TV/Cable advertising. Pundits derided him for biting the hand that fed him, for being a brash upstart who should think before speaking in such a provocative and inflammatory manner.
Emperor's new clothes, guys! Kilar was just doing the math, and called it like he saw it.
Read the blog post. Nothing snide or underhanded or disrespectful about it. In fact, Kilar pays great respect to the historical evolution of the TV business, and wants to celebrate the advent of an even better model that can reap benefits for everyone in the new media landscape.
The handwriting is on the wall. Internet viewers are more trackable. Subscribers to internet content services like Hulu or Netflix (or Amazon or iTunes etc.) are more than a cable box and a phone number. Forget Nielsen surveys! Each subscriber's viewing history is part of the database. Privacy (hopefully… OK, subject for another blog...!) de-couples the person from their activity, but the data is available, and powerful, and valuable. Internet audiences can be leveraged to much greater advantage than TV audiences. I'm not an internet or social media marketer, but you'd have to be living in another dimension to ignore the much greater future impact of this space.
Subscriber growth in the streaming content space has taken everyone by surprise this year. Hulu estimated earlier in the year that they would almost double their revenues in 2011, and, of course, we've all been following the meteoric rise of Netflix subscribers, who now outnumber Comcast cable subscribers.
So by throwing in the towel, Hulu's three old media partners have basically retreated to the deteriorating shelter of the old media business infrastructure that they know. What this says to me is that they can't, or won't, disentangle themselves from the past, and, like so many fossils in the archives of business, they are covering their eyes, ears and mouths and clinging to an outdated definition of who they are and what they do.
Now is the time to shift more resources into streaming services, to make more content available with more variety (product mix and subscription options). Now is the time to develop more partnerships, more incentives, more innovative ways to mine the fresh market (bundling, mobile apps, live events... the list goes on.). What's their plan? What are they going to do when they sell their stakes in Hulu? Throw the money into signing up more cable subscribers who would rather cut the cord?
Time will tell. But as far as I'm concerned, one thing is certain: free from its old media masters, Hulu will be in an even better position to expand its market, produce new products, develop new revenues, and claim the future of the content business along with its visionary new media siblings.