Tuesday, March 22, 2011

How does Hulu’s value proposition differ from traditional broadcast and cable television?

Hulu CEO Jason Kilar has been quoted as saying that the company’s objective is “helping users find and enjoy the world’s premium, professionally produced content when, where, and how they want it.”  This statement highlights Hulu’s competitive advantage over traditional cable and broadcast companies and other web based content providers like YouTube.  Cable and broadcast companies have literally networked their way into consumers’ living rooms in order to provide professionally produced content over their many channels but their strength is also their weakness.  Having invested so much capital in creating and maintaining their cable or fiber-optic networks, they are either unwilling or financially unable to develop new means of delivering that content.  Other web based competitors do not have access to “premium, professionally produced content” and instead offer thousands of short clips created and uploaded by other users.  While some are well made and many are enjoyable, very few appear professionally produced.  Hulu exists between these two spaces.  Major media companies News Corp and NBC Universal partnered to create Hulu in 2007 as a means of distributing their premium content to users not necessarily in front of a television set.  Hulu benefitted from this pedigree by immediately gaining access to the content of Fox, NBC, Warner Bros, and Lionsgate.  The newly formed company quickly set about creating a platform that would enable users to view content not only at Hulu.com but at hundreds (later thousands) of partner websites.  The company has since focused on distributing content to smart phones, allowing users to stream to their television, and entered into an agreement with Disney that provided Hulu access to Disney’s content in exchange for an equity stake.  Hulu has developed ways to position its premium content to users wherever the user is using whatever device the user has available.  It even allows the user to select the program(s) they wanted to view on demand.  This set the company apart from other cable or broadcasting companies that aired a set line up on various channels via connections to televisions.  While many cable companies have developed on demand features that enable users to select when they want to view specific programs, they still limit their distribution to television. 

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