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Losing Money Opens Door for Hulu

by May 13, 2009
Coming to a country near you.

Coming to a country near you.

Just when you may have given up on ever getting access to Hulu in your country (those of you outside the US), a light has emerged. Hulu is currently penning deals with six to eight new markets which would not only give those markets access to Hulu but also give US users access to shows they've never seen before. They might not be in English but at least they'll be new.

All this comes on the heels of a post describing how to access Hulu from any country. Currently, Hulu has disabled that workaround (as expected) though most people should be excited that they'll have legitamite access to Hulu soon. Hulu, started only 18 months ago as a way to get some revenue from online showing of their content, has come a long way. Recently, they penned a deal with Disney which adds considerably to their lineup which include shows from FOX, NBC Universal, Comedy Central, Lionsgate, MGM, MTV Networks, National Geographic, Paramount, PBS, Sony Pictures Television, Warner Bros. and more. Users have complained that Hulu was only lacking programming for children, with the addition of Disney, those critics should be mostly silenced.

The Disney deal didn't come without a cost, however. Hulu was initially created by by NBC Universal, News Corp. and Providence Equity Partners. Now, Disney is an 30% equity partner with three seats on the board. Bringing to the table shows like Lost and The Secret Life of the American Teenager, it's easy to see how Disney's partnership will increase Hulu's reach.

This signals a shift in the thinking of studios toward not only online distribution but perhaps even control of how that content is viewed. This is important in that it trends away from the YouTube model and towards Hulu. Google, the owners of YouTube, have been reportedly reticent about sharing profits with anyone else. Since the owners of Hulu are in essence "double dipping" since they own the shows and Hulu, they seem to be not as worried about the bottom line as Google.

The real question has always been - why can't people outside of the US view Hulu (legally). Basically, there are distribution deals in place where episodes of shows like 24 are shown overseas but delayed by weeks or even months. If viewers could see the current episodes the day after they are released in the states (as they could on Hulu), there would be no motivation to watch it on their local provider. While there has been no specifics released of the current negotiations, it wouldn't be surprising if overseas viewers were still blocked from accessing current seasons of hit US shows until after they are released locally.

The conundrum for most users has been why the studios are so reluctant to offer their content online. They argue that it is a new revenue stream while the studios have been worried about undermining their current paradigm and perhaps losing control of their content. The proverbial stray ended up being an amazing singer from England.

That's right, Susan Boyle.

If you haven't seen her, you should. This contestant on Britain's Got Talent wowed Simon Cowell and the world with her rendition of I Dreamed a Dream from Les Mis. ITV, the distributor of Britain's Got Talent, sat by helplessly while over 100,000,000 views of this video clip raced around the world on YouTube. Revenue dollars for ITV? $0.00. That set a lot of studio execs to thinking about all the money they could have made if they had hosted that video and just stuck a McDonnald's (or other international company's) ad on the front. This opened the door to Hulu and will hopefully encourage others to put their content online through some service (Hulu or others). Currently, BBC and ITV are in negotiations with Hulu to carry their content. Deals have just been struck between Hulu and Digital Rights Group (owners for comedies including Green Wing, Peep Show and Doc Martin) Saavn, a large Bollywood film distributor.

While here at Audioholics, we don't really care one way or the other how content gets online, we just care that it does. It also seems fair to use that the studios that invested so much money into the creation of that content be compensated. Hulu currently seems to straddle the line very well - they provide a place for us to get our content with minimal commercials. While we'd love to see a competitor step up to the plate (YouTube is trying to bring more long form content), what we don't want is a bunch of exclusive deals fracturing the market. We don't need an online format war. With the impending 3D war and the recent resolution of the high def war... well, we're all warred out.

About the author:
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As Associate Editor at Audioholics, Tom promises to the best of his ability to give each review the same amount of attention, consideration, and thoughtfulness as possible and keep his writings free from undue bias and preconceptions. Any indication, either internally or from another, that bias has entered into his review will be immediately investigated. Substantiation of mistakes or bias will be immediately corrected regardless of personal stake, feelings, or ego.

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