Gibb+D+strategy+report

Gibb D

TO: Proximity Video Team FROM: Daisy Gibb DATE: March 2, 2010 SUBJECT: Hulu strategy analysis

This is my Hulu strategy analysis. Hulu is a video website supported by advertising that is inserted into the show or movie at various points (Kirkpatrick 2008). Hulu is currently the second largest video provider on the web, but some analysts think that Hulu must start charging for online premium content to keep this position. Whether Gen Y will continue to use Hulu even if it does have premium content depends on whether other premium sites will also give them Hulu type content.


 * Profile**

General Electric owns NBC, which is the prime controller of Hulu.com, a site that provides free online streaming video including TV shows from FOX, NBC, and ABC and films from studios including Sony and MGM. Hulu was launched in 2008 by CEO Jason Kilar as a joint venture between NBC (General Electric) and Fox (News Corp). The following year ABC (Disney) became a shareholder and content partner (Google Finance 2010).

NBC Universal is responsible for 9% of General Electric segment sales. General Electric brought in $182 million in 2008 and $156 million in 2009. Because of the weak economy and reduced spending on advertising and in the film industry, General Electric forecasts that sales will decrease 3% in 2010, and NBC will experience a 1% decline in sales. (Standard & Poor's 2010). Hulu, however, will most likely still be profitable because the “list of advertising sponsors working with Hulu has grown to more than 400” (Graham 2009).


 * Competitive Landscape**

Two primary forces shape the competitive landscape in the online streaming video marketplace:
 * content suppliers such as NBC, Fox, ABC, MGM, Sony, and Time Warner (Wikipedia 2010).
 * users who can view their favorite TV series or film at many diferent sites: CBS Interactive, Netflix, YouTube, Surf the Channel, Tidal TV, and EPIX (Venture Beat Profiles 2010).


 * Hulu’s strategy**

Hulu still offers free TV shows and videos, “despite numerous reports that it would begin charging for content in the future” (Slattery 2010). Kilar said a “free version of Hulu will always exist but that the company was exploring premium pricing” (Graham 2009).

The number of videos Hulu shows each month has quadrupled in the last year, jumping from 240.6 million videos viewed in December 2008, to one billion in December 2009 (Graham 2009). Hulu plans to continue offering their current services while hoping to maintain their increase in views.


 * Gen Y implications**

There are many things that Gen Y likes about Hulu: it’s free, the images are clear, it’s organized, simple, easy to use, and they can watch all of their old favorites whenever they want. The biggest question regarding Hulu’s future success is whether or not they will start charging for premium content and if Gen Y will pay for it, or if they will just continue to provide their current services.

Because they are undecided and wont be able to do anything with premium pricing until the General Electric/Comcast deal closes, Proximity clients should wait to see how this deal plays out and whether Gen Y continues to use Hulu with or without the premium pricing.


 * References**

1. Google Finance. (2010). Hulu, LLC. Retrieved February 24, 2010 from  2. Graham, Jefferson. (2009). Hulu cues up for next step; free site hits milestone: 1 billion videos viewed. LexisNexis Academic. Retrieved on February 24, 2010 from  3. Kirkpatrick, David. (2008, March 8). A new way to watch TV. Fortune. Retrieved on February 24, 2010 from  4. Slattery, Brennon. (2010, February 17). HBO's streaming site to compete with Hulu? PC World. Retrieved on February 24, 2010 from  5. Standard & Poor's. (2010). General Electric company profile. Retrieved on February 24, 2010 from  6. Venture Beat Profiles. (2010, February). Retrieved on February 24, 2010 from  7. Wikipedia. (2010, March 1). Hulu. Retrieved on February 24, 2010 from 