Hulu pressured by Netflix

Posted by Lydia Leavitt

When Netflix hit the scene it put intense pressure on content distributors like BlockBuster and movie channels to revolutionize the way they do business. But what about other streaming Internet-based media services such as Hulu?

To be sure, the Wall Street Journal reports that Hulu faces not only intense competition from Netflix but also an increasing lack of faith from investors, forcing the company to restructure its business plan or sink.

 Hulu currently acts as a database of episodic content with banner ads, offering visitors a full range or prime-time TV options for free.

Yet, Hulu may not utilize this business model much longer, instead perhaps choosing to transform itself into the first full-fledged online cable operator with live shows and video on demand. 

And this initiative is actually not Hulu's choice alone. Rather, it is a byproduct of pressure that Netflix is exerting on major cable providers.

Since cable providers are being forced to rethink their content strategy, part owners of Hulu from NBC, News Corp, and Disney are forcing their concern onto Hulu. Worried that Hulu’s free model may take a piece out of their TV profits, execs are looking into pulling content from the popular website.

In the meantime, Hulu’s owners are licensing their content to Netflix, which has a growing number of TV offerings and over 20 million subscribers. If studios license their content to Netflix, they’re looking at somewhere near $100,000 per mid-season episode rather than ad revenue from Hulu.

Other rumors about Hulu’s eventual demise include reports that TV executives are now reluctant to provide Hulu with exclusive content and may choose to make the site wait (at least) two weeks for new content.

If either of these rumors are true, it will pretty much be the death of Hulu. Then again, a similiar fate may await Hulu if it chooses to becomes an online cable provider.