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Can Hulu Replicate the Success of Netflix?

Posted on Wednesday, Dec 25th 2013

Over the last year, online streaming player, Hulu, has toyed with several ideas for future growth. It had evaluated ideas ranging from becoming a publicly listed company to selling the business to other online players like Yahoo. But of late, the company has decided to stay independent and continue to invest in its own growth. Recently published reports suggest that the investment has paid off as Hulu has managed to deliver strong growth.

Hulu’s Financials

According to results announced earlier this month, Hulu expects to end the year with revenues more than $1 billion, compared with $695 million a year ago. Revenue growth is attributed to the increase in Hulu’s membership base for its paid for service, Hulu Plus. It has more than 5 million paying subscribers for the service, compared with 3.25 million a year ago. Hulu did not disclose if increased revenues resulted in a profitable year.

Hulu Investing in Content

In addition, Hulu continues to grow its media library. Today, Hulu provides access to more than 86,000 TV episodes for over 2,900 TV series through tie ups with more than 488 content partners. They have 68,000 hours of video streaming available to their users. Hulu Plus has exclusive access to some of the best running TV series. They offer current season content from five of the six largest U.S. broadcast networks and access to seven of the top 10 TV shows, including “Modern Family,” “The Voice,” “Scandal,” “Grey’s Anatomy” and “Sleepy Hollow” to name a few. Hulu’s biggest distinguishing factor is that the company is able to show TV shows online the day after they air on TV. Recently, they also entered into an agreement with BBC to stream over 2,000 new episodes and 144 titles of BBC’s programming, including “Doctor Who,” “Luther,” “Top Gear” and “Sherlock.”

Like Netflix, Hulu is also developing their original content and during the year released over 20 Hulu Original series with shows like “The Awesomes,” “Behind the Mask” and “The Wrong Mans.” According to the management, the shows were received well by the audience, though none of them made it to the Emmys like Netflix’s original programming. But that is not stopping Hulu, which plans to double its original programming during the current year.

Hulu’s Expanding Reach

Hulu’s membership base has been expanding due to their continued commitment to being readily available on multiple devices. Hulu has tied up with the launch of most new age consumer electronics including the next-gen gaming consoles of Microsoft’s XBox One and Sony’s PlayStation 4. Hulu Plus is accessible on more than 400 million Internet connected devices in the country. They also tied up with Google to enable content to be viewed through Google’s Chromecast. Within mobile devices, users can view their content on Nintendo 3DS, Windows Phone 8 based devices. They redesigned their iOS apps to improve the user experience on Apple TV and iPad.

Hulu is also rumored to be talking with pay TV providers to enable access to their content through the pay TV network. The talks are currently in early stages, but if things were to go through, then Hulu would expand their reach and need not count on cable cord cutting to generate additional traffic to their site.

Overall, Hulu’s subscriber growth may be impressive, but it does need to turn this growth into profits, especially while investing heavily into original programming. It’s  a tricky game to balance original content, licensing deals from other producers, and running its streaming operations. Netflix has played the game well thus far, showing that it can be done.

Can Hulu do it?

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