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I find it hard to see why anyone would view Hulu as a worthwhile investment, at least other then something to ride up post IPO and then get out quick. Its enti

by ajg1977 16y ago

I find it hard to see why anyone would view Hulu as a worthwhile investment, at least other then something to ride up post IPO and then get out quick. Its entire value derives from the content it offers - content that it will never own, and will forever remain beholden to the content providers for. "Pssst! Wanna buy part of our company and share in the profits? But only a little bit of the profits of course, because you'll be using our content and have to license it from us. And we'll gradually squeeze your profitability down to a negligible amount over the years, because it's our content and that's what we've done in every market. And when the cable companies get pissed that people are switching to Hulu, we'll likely start blackouts/delays to keep them happy and devalue your service. Whaddya say?"

jakarta 16y ago
There are a lot of benefits in this model. If you can start getting subscribers and cash coming in you typically end up with high retention rates and low capital investment requirements. Eventually Hulu could throw off a lot of free cash flow which would be good for owners. Liberty Media Starz is a good example. They successfully generate a lot of cash and are now on sound enough footing to start creating some of their own content. They just grabbed Chris Albrecht who was behind HBO's original content push. Plus, with this Netflix / EPIXHD deal, Starz is likely to have their contract with Netflix re-negotiated at a much higher price and benefit.
yurylifshits 16y ago
Leading content providers (News Corp, NBC, ABC/Disney) have stakes in Hulu. Therefore their incentives are aligned and it is unlikely that Hulu will be cut from the content. Quite the opposite, it can be given an exclusive content access (earlier, better quality, behind the scenes). Your argument can be applied in the same way to other companies: Netflix (movies), Amazon (books). Being a distributor (and thus depending on producers) is not necessary a business killer. Cable companies can not directly discriminate Hulu traffic due to net neutrality principle. And in the future most of the traffic will go through wireless carriers.
- lftl 16y ago
  > Leading content providers (News Corp, NBC, ABC/Disney) have stakes in Hulu. It's also part of the problem from an investor perspective. Hulu is pretty much never "profitable" but that completely ignores the fact that its major stakeholders get a huge chunk of its revenue since it's their content. I can't find the article now, but one stated the content providers receive upwards of 60% of Hulu's revenu. So Hulu doesn't make a "profit" but basically everyone that owns a stake in it is getting a good return on investment. That conflict of interest with the other major stakeholders would give me major pause about buying into Hulu. EDIT: I think this is the article I recall reading http://www.businessinsider.com/henry-blodget-hulu-turns-profitable-we-eat-crow-2010-4 http://www.businessinsider.com/henry-blodget-hulu-turns-prof... And the numbers there are different (and probably a bit better) than what I stated above, but the general point stands that you're buying stock in a company where the major stakeholders are getting a return regardless of whether Hulu turns a profit or not.
jonknee 16y ago
That's no different than something like DirectTV, almost all radio stations and many cable TV stations. Also, who says Hulu can't start financing made for web shows?

by ajg1977 16y ago

jakarta 16y ago

There are a lot of benefits in this model. If you can start getting subscribers and cash coming in you typically end up with high retention rates and low capital investment requirements. Eventually Hulu could throw off a lot of free cash flow which would be good for owners. Liberty Media Starz is a good example. They successfully generate a lot of cash and are now on sound enough footing to start creating some of their own content. They just grabbed Chris Albrecht who was behind HBO's original content push. Plus, with this Netflix / EPIXHD deal, Starz is likely to have their contract with Netflix re-negotiated at a much higher price and benefit.

yurylifshits 16y ago

Leading content providers (News Corp, NBC, ABC/Disney) have stakes in Hulu. Therefore their incentives are aligned and it is unlikely that Hulu will be cut from the content. Quite the opposite, it can be given an exclusive content access (earlier, better quality, behind the scenes). Your argument can be applied in the same way to other companies: Netflix (movies), Amazon (books). Being a distributor (and thus depending on producers) is not necessary a business killer. Cable companies can not directly discriminate Hulu traffic due to net neutrality principle. And in the future most of the traffic will go through wireless carriers.

lftl 16y ago
> Leading content providers (News Corp, NBC, ABC/Disney) have stakes in Hulu. It's also part of the problem from an investor perspective. Hulu is pretty much never "profitable" but that completely ignores the fact that its major stakeholders get a huge chunk of its revenue since it's their content. I can't find the article now, but one stated the content providers receive upwards of 60% of Hulu's revenu. So Hulu doesn't make a "profit" but basically everyone that owns a stake in it is getting a good return on investment. That conflict of interest with the other major stakeholders would give me major pause about buying into Hulu. EDIT: I think this is the article I recall reading http://www.businessinsider.com/henry-blodget-hulu-turns-profitable-we-eat-crow-2010-4 http://www.businessinsider.com/henry-blodget-hulu-turns-prof... And the numbers there are different (and probably a bit better) than what I stated above, but the general point stands that you're buying stock in a company where the major stakeholders are getting a return regardless of whether Hulu turns a profit or not.

jonknee 16y ago

That's no different than something like DirectTV, almost all radio stations and many cable TV stations. Also, who says Hulu can't start financing made for web shows?