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Google might buy Hulu to get access to today’s popular TV shows for YouTube and its other products.But a person with knowledge of Google’s video strategy says that Robert Kyncl — the executive that Google hired away from Netflix last year — is more interested in building and funding professional Web video.
Those projects are already well under way. Earlier this year, Google was reportedly investing up to $100 million to convince celebrities to create original YouTube channels, and YouTube introduced a live video platform — perfect for concerts and sports — in April.
This person compares the current state of Web video with the rise of the cable industry 25 years ago. Back then, the big broadcasters knew cable would erode their audience so they began making “flanking investments” in their own cable brands. A lot of those brands are now household names, like CNBC and ESPN (which ABC bought in 1984; Disney later bought the whole shebang).
Now, big media companies like NBC, Hearst, and Gannett are exploring the same kinds of early investments in online video content.
So look for Google to follow along those lines: rather than trying to buy the current MTV or ESPN, it will build the next ones, or make equity investments in the companies that are trying to do so.
As far as Hulu goes, this person acknowledges it’s a trailblazing platform, but its real value is in the contracts it has with content creators. Those contracts are of relatively short duration and the content itself has uncertain value — TV ratings can change very quickly. So it’s not clear why anybody would pay such a huge premium for a company with such uncertain long-term value.
That said, Google can afford it — the company has almost $40 billion in cash — and want to keep Hulu out of the hands of competitors.