New and Old Products Close In On Hulu

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Hulu’s management may not have admitted it already, but the company is about to be irreparably damaged by new initiatives to stream premium content  to the home. The first was launched over a year ago by Netflix (NASDAQ: NFLX). It has been an unqualified success. Amazon.com (NASDAQ: AMZN) said it would accelerate the launch of a similar service. This sent Netflix shares tumbling.

Amazon has such a large number of customers that it has an edge over almost any other service.  It seems to offer as many titles as Netflix.

YouTube is about to announce that it will begin to stream NHL and NBA games. The largest video site is still dominated by amateur content, but it has tried mightily to interest its audience in premium content. YouTube has also had success selling video advertising which is a revenue source at the heart of Hulu’s model.

Hulu has launched a premium service called Hulu Plus. The offering costs $7.99 a month. Its library is limited and is mostly television shows. Most analysts who track streaming video say that Hulu Plus has a small part of the market. It is probably not enough for the service to stay viable, even if it does sell video advertising in its programs.

Hulu is also flanked by old technology. Cable operators have increased their VOD products and cut prices. Satellite TV has increased the libraries of content offered by companies in the industry.

Hulu’s CEO recently argued that his company’s business model needs to be altered. What he did not say is that any new plans will be too late.

Douglas A. McIntyre

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