Hulu.com: A New Business Model for Online Video?
Case Code: BSTR326
Case Length: 14 Pages
Pub Date: 2009
Teaching Note: Not Available
Organization: Hulu LLC
Industry: Online Video
Themes: Business Models, Growth Factors and Challenges
Abstract Case Intro 1 Case Intro 2 Excerpts
"We embrace this activity in ways that respect content owners' - and even the entire industry's - challenges to create great content that users love. Yes, it's a complex matter. A tough mission, and a never-ending one, but one we are passionately committed to."
-Jason Kilar, CEO of Hulu, in 2009.
"I think there's a snarky desire to say this is big dumb media and this is a big dumb joint venture. If there is a product that's attractive to consumers, we'll be just fine."
- Peter Chernin, President of the News Corporation, in 2007.
In mid-February 2009, Hulu.com (Hulu), an online video site which offered Internet users TV shows and movies from about 110 content providers, decided to stop providing content to two websites - TV.com and Boxee.tv. While it stopped providing content to TV.com stating unspecified 'contractual issues', it broke its links with Boxee.tv after some of its content providers asked it to do so. Hulu was developed by two rival media companies, Fox Broadcasting Company (Fox) and NBC Universal (NBC), as a competitor to YouTube.com (YouTube).
YouTube, the most popular online video destination site in the world, posed a problem for the two media companies, because users often uploaded copyrighted material to YouTube, without permission from the copyright holders. Monitoring YouTube for copyrighted content so that it could be taken down was a difficult job. Therefore, the companies decided to develop a website which would not only be an alternative to YouTube, but would also help them monetize their content. Hulu, which was launched in March 2008 and was available only in the US, was based on a new business model. Instead of charging users for downloading content like many other online video websites, Hulu inserted ads in the videos it offered. This made Hulu work more or less like a TV channel, except that it was on the Internet. Hulu developed a site with simple, easy to use features, where users could view streamed8 content with a flash-based video player...
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