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Three years ago, when Hulu was created, we expected the company would eventually fall prey to the massive conflicts of interest between its TV owners and its online product and customers.We based this view partly on recent experience. We had watched the same thing happened to the cable industry’s AOL–@Home–in the 1990s. We were confident that Hulu’s TV overlords were not about to sit back and watch an Internet company steal their thunder and profits, even when they owned a piece of it.
This self-destruction process took a while–Hulu has built a great product and a good business–but it seems to be happening now.
Yesterday, Hulu’s CEO Jason Kilar wrote a blog post outlining Hulu’s view of the future of TV. In this post, among other things, he said:
- Traditional TV has too many ads
- Hulu’s ads are 2X as effective as TV ads
These comments seem reasonable enough. But, as you might expect, they caused Hulu’s TV partners to hit the roof. Executives were so angry that several of them bitched anonymously to the FT:
One person close to Hulu said the company’s owners were furious with Mr Kilar. “If I were given billions of dollars worth of programming, I too could probably build a business,” the person said. “But I know that in order to build a long-term, viable business I would have to do so in a way that works for everybody…”
Another person close to the situation said Mr Kilar was out of touch with mainstream television viewing. “These are clearly the musings of an elitist who is obviously disconnected from how the majority of America watches television,” said the person.
Walt Disney said Mr Kilar’s views were “personal and clearly not shared by anyone at Walt Disney“.
Personal and not shared by ANYONE at Walt Disney, not even the folks who watch TV or invested in Hulu? Defensive, much?
Jason Kilar’s a smart guy, so we imagine he didn’t make these remarks with no idea of the fury they would invoke. So we read this as a throwing down of the gauntlet.
Specifically, we read it as Jason making his last stand–demanding that he be allowed to build a Hulu that works for Hulu’s users and advertisers and not just the corporate overlords in the traditional TV business.
Will this approach work?
Unlikely. The mission of Jason’s TV partners is to protect what they’ve got, and they’re really good at it. So despite the great job Jason has done at Hulu, we expect he will soon be moving on.
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