Hulu will not be sold. The online video website was put on the market by its owners, 21st-Century Fox, NBCUniversal and Walt Disney Co, (NYSE: DIS). Rumors claim there were buyers. Not likely. Or likely not at the price that the owners wanted to fetch. Instead, these owners will keep Hulu and desperately try to save it with an investment of $750 million. However, Hulu is too small and insignificant to survive, at least profitably.
Hulu remains behind a number of competitors its vies with either directly or indirectly. It could be claimed that direct competition includes Netflix Inc. (NASDAQ: NFLX) and Apple Inc.’s (NASDAQ: AAPL) Apple TV. Add to that Amazon.com Inc. (NASDAQ: AMZN), the largest cable companies in the United States, satellite TV operations, several studios that may not want Hulu to be their conduit to consumers, telecoms that have built out fiber to the home and Google Inc.’s (NASDAQ: GOOG) YouTube, which has made a push into the premium video market. All of these compete for content, and several are willing to pay large sums in an attempt to corner the market on the movies and television shows most popular with consumers.
One yardstick for measuring Hulu’s challenge is the comScore rating of monthly viewership of online video properties. This measurement does not capture the audiences of cable or Netflix. According to the May report, online video is completely dominated by YouTube. Of the 182 million unique views who visited Internet sites, 155 million visited YouTube. Minutes per viewer for YouTube were 437. By contrast, minutes per viewer for the next several largest sites where around 70 per month — less time than required to watch a full-length movie. In terms of unique views, Hulu does not even make the top 10.
The largest sites in terms of viewership after YouTube were those of Internet portals and entertainment company sites. These include Yahoo! Inc. (NASDAQ: YHOO) and AOL Inc. (NYSE: AOL), each of which wants to build large libraries of video because video ads carry a large premium compared to others, like display ads, that run on the Internet. These will compete, if they do not already, for the content that Hulu needs to hold an audience. Also on the list of huge sites based on video viewership are Disney and 21st Century Fox rivals Viacom Inc. (NASDAQ: VIAB) and Turner Digital. Each of these has to have at least some concern about Hulu’s success as it tries to build its own presence on the Web.
The competition to Hulu is nothing less than overwhelming, and much greater than many analysts grant.
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