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Hulu’s Sale Looks Uncertain

Posted on Tuesday, Oct 11th 2011

Hulu’s willingness to be bought, announced earlier last quarter, has raked in numerous bids. To sweeten the pot for the buyer, Hulu recently reported improved viewership statistics, increased market reach and an expanded library offering. But recent news suggests that despite their success, selling Hulu may not be all that easy.

Hulu’s Content Expansion
Unlike in the past, the recently released quarterly blog post by CEO Jason Kilar was devoid of details on finances. But it did talk about the numerous steps Hulu has taken in the last quarter to expand its reach. Hulu continued to expand their content library for both Hulu and Hulu Plus. Videos on Hulu reported growth of 39% over the year, while the library on Hulu Plus grew 106% over the year. Hulu recently entered into an agreement with Univision to list Spanish-language content on their website. Through the agreement, Hulu plans to address the more than 50 million Hispanic people in the country and also became the first ever service provider to offer such a vast library of content focused to that demographic.

Last quarter, Hulu also entered into original content development with the launch of the documentary titled, “A Day in the Life.” The series was ranked as the most popular series on their channel during the summer. Buoyed by the success, Hulu is looking to create more such content for their channel.

Hulu Plus’s Increasing Viewership
Hulu’s premium service offering reportedly added more subscribers in June of this year than in April and May put together. After reporting 875,000 paying subscribers last quarter, Hulu Plus has topped the 1 million paying subscribers benchmark within 14 months of launch. Hulu claims that this is the fastest reported growth among the available “video subscription service in the U.S.”  In addition to content, it is expected that the availability on more than 120 million devices in the market has also helped to improve Hulu Plus’s adoption rate.

Hulu’s International Expansion
Last month, Hulu launched their subscription services in Japan, making it their first international market offering. Japanese subscribers will be charged a monthly fee of 1,480 yen (~$19.00) for access to Hulu’s content. Hulu will also add Japanese-language content on their Japanese website. Hulu also entered into a marketing agreement with Japan’s largest mobile services provider, NTT DoCoMo, to sell their services.

Hulu’s Social Approach
Recognizing the importance of social networks, Hulu reported two new integrations with Facebook. Earlier this summer, they launched Facebook Connect and last month launched a Facebook app. Facebook Connect integrates the user’s Facebook account with their Hulu account, enabling simpler logging capabilities and adding features such as the ability to comment and interact with friends. The app also lets users watch Hulu content while remaining on the Facebook site.

Hulu’s Sale
While the previous quarter was flooded with news on Hulu’s potential sale, recent news indicates that the company may have put their sale plans on hold for now. Bidders included Google, Yahoo, and Amazon, to name a few. However, their biggest bid came from Dish Network, which bid $2 billion for the sale. Analysts believe that the sale may not happen due to “complicated digital rights” over the content and the overall unwillingness of all their current owners to part with the asset.

Despite the big steps taken by Hulu, they are still a long way away from Netflix’s more than 22 million subscribers. A Nielsen survey found that more than half of Netflix users prefer to watch Netflix content through video-game consoles hooked up to their television; however, more than 90% of Hulu users watch their content directly on the computer. But Hulu does seem to be the preferred choice for television shows. Nearly 36% of Netflix users watch both movies and television shows compared with 73% of Hulu users who watch television programs on Hulu. Hulu still needs to work on their movie content as a mere 9% of Hulu users use the service to watch movies.

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