Hulu Case

Hulu is popular but that wasn’t the goal

http://articles.latimes.com/2011/apr/12/business/la-fi-ct-hulu-20110412

After the internet’s emergence, especially during the last decade consumer preferences on entertainment and the media providers has changed a lot. People used to pay for news buying newspaper prints but now most of the people prefer reading online papers which are mostly free. TV used to be free until subscription television became popular in 1980s and likewise new generation refuses to pay for traditional cable and satellite instead they either watch shows online or via Netflix (or other video on demand systems). When users are not charged by subscription fees, the only other way of income left to the media companies are advertising revenues. But even these ads reach so many eyeballs the conversion rates are getting much lower since advertisements on internet is mostly considered boring and irritating. This means they should build a better business model which is a win-win for both them and users.

The internet TV service Hulu, which is owned by Walt Disney Co., News Corp. and NBCUniversal has become increasingly popular with delivering hit TV programs one day after they are broadcasted for free with commercial interruptions. The company also launched HuluPlus which enables users to watch the content on their portable devices such as iPhone, iPad and other mobile phones. While Americans viewed 4.3 billion video ads in March, Hulu generated the highest number of video ad impressions at more than 1.2 billion and delivered the highest duration video ads according to figures from comScore. On the other hand, despite all this success company owners are worried that Hulu being so popular will lead to consumers dropping the cable and satellite which make them lose their main business. And also they are concerned about losing advertising revenue. Hulu attracts 27 million viewers monthly and has revenue of $300 million. This amount is still way low compared...