analysing NBC’s defence of Hulu

Peter Kafka reports from OMMA that NBC’s George Kliavkoff (GE) dismisses concerns about Hulu by making the following points:

  • Hulu’s network reaches 98% of web users
  • Hulu will serve high-quality full-screen video.
  • Hulu will have “assorted tools and tricks.”

So, are we changing our thesis that Hulu is screwed?  No.

First, note what Kliavkoff didn’t say: “Hulu will have exclusive content that you can’t get anywhere else.  Hulu has all the major media companies as partners. Hulu has a great economic model. Hulu already has tens of millions of users worldwide and a global brand name. Etc.” Why didn’t he say these things?  Because they wouldn’t be true. One or more of those assets might make a difference, but the ones that Kliavkoff cites won’t.

First, the reach. 98% of web users?  YouTube–and every other video hoster/server–has “access to” 100% of web users who want to watch video content. If what George means is Hulu’s syndication network will place videos in front of 98% of users even when they don’t want to watch video, our next question would be: How much of this distribution is exclusive?  Some follow-ups: If any distribution is exclusive, how long are the exclusive contracts?  What is the revenue share to distribution partners?  Why, exactly, do distribution partners agree to do Hulu exclusives?  Are you paying them upfront? 

Second: high-quality, full-screen video? Nice, but if this were a unique and compelling selling point to media partners, Hulu would have signed up all of them (or at least more of them).  Do video viewers prefer “full screen high quality video”?  In some cases.  But they can already get a ton of it.  If this really is a key differentiator, all the existing video aggregators will start serving it, too (the ones that already don’t).  Lastly, serving 100% high quality full screen video makes Hulu’s economics even worse than the ones we laid out (which were based on standard video file sizes).

Third: Assorted “tools and tricks”?  Impossible to evaluate without knowing more details, but we’re not optimistic.

See Also: Why Hulu is Screwed, Part 1, Part 2: Bad Economics