Mediaweek on the Netflix & Hulu War

Mediaweek on the Netflix & Hulu war:

Netflix is starting to get into Hulu’s business, and under its skin. According to sources, last month Hulu execs were fuming over NBCU’s decision to offer episodes of Saturday Night Live via the Netflix Web service the day after they air.

While nearly all of the major networks work with Netflix, typically viewers aren’t able to rent or stream episodes from the current season. Catching up on last night’s episode is Hulu’s territory and this had been a major differentiator until now. NBCU’s SNL deal may encourage the other networks to follow suit, and Hulu worries that this will further erode its exclusivity.

Tidbit from the story: Hulu's 2010 revenue should hit $240 million, but they share more than half with partners ABC, NBC and Fox. Hulu needs to go public to get the funds to compete with Netflix's billion dollar plus commitments for movies and TV shows.

Comments

[Crow550]

Boo-who Hulu. Get over it....

Get some cable content and drop the Monthly cost....

Hope Netflix does get more & I hope Hulu Plus does too.

Well see how Hulu Plus can compete.

[ClydesPlace]

Hulu plus has a ways to go. But after now experiencing both paid Hulu and Netflix I'm firmly in the corner of you can't have it both ways. You want to charge for your service? Fine, trash the commercials and increase your content to make it worth the money. Paying to watch less on my TV and with commercials just doesn't add up.

Want to give it away free? Fine, then you can keep the commercials and I won't object.

[Bob Emmerich]

NBC is a Hulu partner (along with ABC and Fox) but Hulu execs were fuming at NBCU? Does that not seem wrong to anybody?

If Hulu did an IPO how long before Netflix owned them outright?

[TigerT]

Keep in mind that the recent NBCU deals with NF, are most likely due to the in process Comcast takeover of N-U...and I honestly believe it was to head off any SEC concerns over Concrap possibly abusing it's power by denying content to competing distributors.

[Rob H]

I will never be able to support Hulu's paid business model until they eliminate ads from Hulu +. Until then, cry me a river.

[Marshall]

Hulu needs more partners, not public partners. If Sony would buy a chunk since they are already a large content partner, then it would bolster their model.

As far as the ads, I'm amazed at how greedy consumers are. You really think 9 dollars a month is going to get all the new content, day after it airs, as well as the library? I don't think so. I'd rather they keep the model like it is than raise the price to what it would have to be.

[Rob H]

@Marshall

Greed doesn't come in to play when you're paying for a service. I have no problem whatsoever with Hulu using ads for its free service. It's the ads with Hulu Plus that kill me. Netflix at its lowest is a $9 service that offers TV shows AND movies with no ads. Hulu Plus is a dollar more, offers far less, and puts ads at every commercial break -- I don't care if the ads are 30 seconds.

If Hulu Plus existed in a world without Netflix, then I would probably not mind the ads. But this isn't the case. The fact that Netflix doesn't insert ads into streaming content just makes Hulu Plus look bad in direct comparison.

[Marshall]

Rob, perhaps greed isn't the correct word then. Perhaps unrealist expectations is better.

Netflix is competing with home video. That's how the studios see it and really it's true. Home video is a pre-pay service so it makes sense that Netflix is the same. The studios see Netflix income as an extension of direct home video sales. That's why Netflix in the past has been very careful about what they spend their money on. It's to balance content versus cost.

Hulu is competing against current television. The cornerstone of the service is current shows a day after they air. If you tell the networks they can't have any ad revenue and instead will have to settle for up front costs then you'd have to pay much, much more. The hours of content don't matter, it's the freshness that counts to the studios. Hulu would cost easily as much as a decent cable package if not more. I'd like to see Hulu be cheaper but at the end of the day ABC and FOX don't. They want their content to still carry a premium. I think the double pay system is to give them a little of both worlds. They have guaranteed income no matter what and huge potential as long as they keep the viewer numbers high.

That's the way I see it anyway.

[s]

Hulu's price is now $7.99 with Roku support.

Worth it yet?

[Bryan]

Why would you get Hulu when Netflix is $8.99 and you get 1 dvd at a time unlimited AND no ads.

[s]

Hulu has TV content that Netflix doesn't. Especially if you've gotten rid of cable, the two services are complementary.

[Purpleslog.wordpress.com]

Roku + Netflix + Hulu Pro + OTADIGITAL ATTENNA + VCR - CABLETV = (Awesome and Cheap)

[Racket]

@Marshall

I don't see things quite the same way. Hulu is paying directly for content. There are no stations or affiliates to support. No staffing, no FCC transmission fees, no program coordinators, no nothing...just content. When you remove the money required to support a TV station and break it down to just paying for the content, Hulu is trying to get paid twice with half the expense. I understand that in the current model, Hulu doesn't actually buy content, they really partner with the content producer and split the proceeds. It is a problem to canabalize one revenue stream for another that pays less, and I am sure Hulu pays less for the networks. It will only work if Hulu seperates from the networks and pays money directly for content much like Netflix does. I doubt Hulu will be nearly as successful as long as they charge AND have commercials.

[gregnice]

All this bantering about HULU this and HULU that..fox and the rest of these people don't get it..it's greed over greed..how much does a show like glee cost to make? Now how many millions in endorsements do they get back plugging products into the show? Then ad revenue..then selling the seasons. If the networks got smart they'd do what abc did and put their stuff in an app for free and just make money off ads. Here's the reality. In ads alone per 40 minute show you want on hulu they clear a cool $2. That's not counting the subscriptions. That's 5 ads at an average of 37 to 46 cents..I know this because I publish a video website and tried to get license to carry such contents longgggg before hulu came around. So let's do the math..ten million people watch an hour long show that's $20 million to hulu who then gives around 70% to the networks. Let's assume Hulu has 1 million subscriptions at $7.99 that's an additional 8 million a month..half to the network and half to hulu. Now you tell me what's more important volume or subscription money?

What folks don't get is that fox and other networks make the cost of the show back before it even airs by selling space for brands within the show. Everything thereafter is icing on the cake. Now you tell me a company like coca cola that spends hundreds of millions a year advertising wouldn't want to get in on a free service and sponsor particlular shows in their targeted demographic? Why couldn't hulu find one sponsor to pay x amount of dollars per season or per episode to be the only ad on that show? Especially if they can deliver millions in terms of centralized audience? This is how facebook is getting so rich so quickly..doing exactly that..yet the networks don't seem to understand that the real money is in advertising.