Hulu was formed as a Joint Venture between NBC and News Corp. (Fox), and later included Disney. Even though it began as an agreement between two conglomerates, Hulu has started its company and vision from scratch. Its culture emphasizes frugality, meritocracy, and ownership. In order to meet its goal of helping users find and enjoy the world’s premium and professionally produced content when, where, and how they want it, Hulu aggregates video content and facilitates distribution in order to make television shows more accessible than what is currently offered by cable operators. I’ve summarized the value proposition for each of its customers below:
Content owners: By 2009, Hulu has partnered with 170 content owners and 30 affiliated websites to acquire and distribute premium video content online. In exchange for its content, Hulu offers networks and equity partners the majority of the ad revenue generated by their content. Participating with Hulu and its affiliated websites is an advantage because in many cases, content owners and networks can grow their audience by making it widely accessible online. This increased audience means that the content owners will receive a premium on advertising during their shows. While this shift to online streaming affects the traditional distribution channels and the amount of revenue networks can receive from license fees, Hulu can potentially provide its content partners with increased revenue from advertising generated by its content.
Users: One of Hulu’s objectives is to bring the content to its audience by making it available through several channels rather than forcing them to come to its site. Rather than a passive experience with cable television, Hulu has created a social experience for its users by making it free, easy, and intuitive, as well as providing the option to review the content. Also unlike cable television, Hulu responds to user feedback and limits the amount of ads cluttering the site in addition to offering content with limited interruption. Hulu also allows options for embedding, which further enables content sharing and encourages new users to discover the content. While Hulu is trying to help the content owners monetize this larger user base, it does make it harder to own and control the content.
Advertisers: Hulu has taken advantage of online media to offer more targeted, interactive experiences for its viewers, allowing the advertisers to create more effective and relevant ads than what can be seen on cable television. Through it’s three ad options (standard, premium, and exclusive), Hulu provides a range of options that provide an advantage to advertisers because the ads integrated into a show can not be skipped or fast forwarded, unlike what happens on recorded shows on cable television. Furthermore, Hulu can collect demographic, geographical, and search behavior and sell ad space at a premium because the advertisements will be more relevant and effective.
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