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Hulu Could Dominate Video Streaming, When Management Wakes Up

Written by: Rocco Pendola 04/27/12 - 3:22 PM EDT
Tickers in this article: NFLX AMZN TWX P

Hulu, however, operates from a different strategically competitive position, as I see the landscape. In case you did not know, Hulu ownership splits between its employees, Providence Equity Partners and old guard media members Disney (DIS) , News Corp. (NWSA) and Comcast's (CMCSA) NBC Universal. Bloomberg reports that Providence Equity is selling it's 10% stake to the big three.

Hulu appeared to take my advice last year. In September, I suggested the company take down the "For Sale" sign and put Netflix out of business:

Hulu should become the one-stop shop for online (and mobile) viewing of all video content, just like cable and satellite have become, as traditional delivery methods. It would benefit every programmer under the sun to become part owner of Hulu and provide its content to what would be a greatly enhanced joint effort. And the cable/satellite operators could join on in a cross-promotional effort to keep both traditional and new content delivery systems alive while providing the opportunity to sell prolific advertising packages across platforms.

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One month later, Hulu took itself off of the market. The company has yet to really make any serious moves to do away with Netflix and dominate video streaming once and for all.

The primary explanation for the inaction might just be the stark reality that Netflix is so weak it will, sooner rather than later, do away with itself. As I have argued, that's probably one reason why Time Warner (TWX) does not squash them. There's no need to make the effort.

I also have to assume that the old guard members have a difficult time getting on the same page. They likely have differing opinions on exactly how much streaming content they should offer, when and at what price. Companies like Disney and News Corp. probably diverge on the issue of how to best protect cable and satellite television franchises. So while the situation is not without issues, for the sake of their respective futures, the old guards need to move more aggressively.

Netflix's Reed Hastings is correct -- streaming is the future. However, I have seen the future of streaming and it's name is not Netflix. Things will shake out one of two ways:

  • A fast-growing collection of the disparate TV Everywhere efforts we have now; or
  • A one-stop shop for streaming video.

I favor the second scenario.