Hulu’s Pay-TV Play: Networks Realize They Should Try to Work with Their Biggest Customers
Hulu has been something of an irritant to cable and satellite TV operators, which have viewed the Internet streaming joint venture as a potential rival — offering a bouquet of current-season TV shows that could prompt people to drop pay TV for the cheaper Hulu Plus option.
Indeed, Hulu’s service has been a bone of contention in retransmission-consent negotiations between media congloms and distributors. To paraphrase the response: Why should we pay more for your broadcast TV programming, if it’s free on Hulu.com?
Now, Hulu’s parents — Disney, 21st Century Fox and NBCUniversal — are pursuing a strategy designed to reinforce the traditional pay TV business instead of threaten it, which arguably should have been its approach all along.
Hulu has held discussions with operators including Comcast, Time Warner Cable, Cox Communications, AT&T and Verizon Communications about pacts that would include Hulu Plus as part of their TV bundles, The Wall Street Journal reported, citing anonymous sources. Hulu also has discussed such an arrangement with AT&T for the carrier’s wireless broadband, according to the report.
Word that Hulu is exploring pay-TV partnerships comes after the company installed Mike Hopkins, former president of distribution for Fox Networks, as CEO.
Given that Hopkins has been sitting across the bargaining table from the likes of Comcast, TW Cable and others for the last five years, it’s logical that one of his priorities would be to find ways to make Hulu a more attractive partner to pay TV operators.
Another point: Fox has already shifted to a “TV Everywhere” strategy for new episodes made available on Hulu.com, back in 2011. Under that approach, new episodes of Fox shows are available to Hulu Plus subs and customers of Fox’s pay TV partners the day after air (which currently include Dish Network, Verizon FiOS and AT&T U-verse), before coming to the free Hulu service after eight days.
Whether big operators will go for the Hulu Plus bundling idea is an open question. Comcast, for one, has shown a preference for delivering its own branded multiscreen services, including Xfinity.TV and Streampix, and has been expanding content deals for them.
Meanwhile, Hulu has been looking to bulk up its originals, as it seeks to compete more vigorously with Netflix. And at the same time, Netflix is looking to cut distribution deals with pay TV players, as well, to expand its reach.
For Hulu, though, the strategy of teaming up with pay TV providers shows that it’s more eager to position itself as an ally to the distributors that pay the freight for Hulu’s parent companies.