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Will Google stay the course and pay the price to land Hulu?

“To Hulu or not to Hulu, that is the question; whether ‘tis nobler for the Tube to suffer the slings and arrows of outrageous studios or to take arms

By PETER WHITE

Published: 7 July, 2011

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“To Hulu or not to Hulu, that is the question; whether ‘tis nobler for the Tube to suffer the slings and arrows of outrageous studios or to take arms against a sea of legal actions and, by buying Hulu, end those actions.”

That’s our Shakespearean way of asking if Google really should or really could buy Hulu. The answer of course is turning into a big fat yes, despite our nervous suggestion a week earlier that this idea was inspired by a slow Stock market day and somebody’s wet dream.

Not that it’s easy to make sense of such a deal or to interpret its outcome, because this seems to be another case of fattening frogs to feed snakes. In our mind Hulu was created as a legal counterpart to what was rapidly becoming the new source of video piracy, YouTube.

In the four years since then Google has perhaps reduced, but perhaps not quite eliminated, its tendency to allow the uploading of copyrighted content, and perhaps the studios are easier with the idea of Google taking over its still fledgling content portal, because like Apple was to the music industry, Google of late has been consistently successful with its new projects .

The inexorable growth of Youtube, the massive rate at which content is loaded to it, and the similar rate at which consumers consume it, is something that Hulu has given up hope of achieving.

Hulu CEO Jason Kilar has said recently that 1 million customers will sign up for Hulu Plus by year end and that the company will have revenues of $500 million during 2011 and shell out $300 million to content businesses.

If you share out $300 million equally between NBC Universal, Fox, Disney and Providence equity partners you get something approaching 0.2% of revenues for the studios and that’s after 4 years. The truth is that 4 years after the iTunes music store had launched (in 2003) it had sold 2 billion songs. So Hulu has not worked anywhere near as effectively as iTunes did. It is NOT on track to be the number one source of online video in the US, partly because it is not tied to an attractive set of devices, which people are buying in droves. And outside the US the studios have not been able to recreate it. It is, by the standards of those organizations who created it, a failure.

Of course you and I and every consumer knows that Hulu is highly popular and given its head it might BECOME such a monster, but as we said the day we heard of its existence, it will never been given a free rein in going to market while it is owned by three jealous studios, who would want all of that traffic for themselves.

In fact here’s what we said about it in 2007, “The likely outcome is that Hulu will not make it to the end of 2008, because TV network executives are too busy trying to win the market share war on TV to learn how to appeal in the entirely new experience of web entertainment.”

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