Hulu Eyes a Bright Future at IPTV World Forum Keynote

Hulu's vision for the future of TV is rosy for everyone, provided the stakeholders-including content owners and distributors-understand that OTT delivery is disruptive and here to stay. Hulu itself is in rude health according to its own stats, which predict 1 million subscribers to HuluPlus and $450 million in overall revenues by the end of 2011.

Keynoting a day devoted to the impact of OTT services on the connected TV environment, Hulu senior vice president Johannes Larcher warned distributors in particular to guard against their demise.

"We don't know how the future will shape for cable, satellite, and telco operators, but four things will affect their destiny," Larcher said, listing these as rapid innovation of service and technology to keep pace with OTT providers; dual revenue streams which mix subscription with transaction and advertising; a tolerance for low margins in marked contrast to the monopolistic position they are used to; and an obsession with customer needs "which cable companies are not good at all. These factors will determine who will win and who will fail."

In Hulu's view, consumers will win because they will watch whatever, whenever, and wherever they want, "and that means delivery over the open Internet, not proprietary linear systems," said Larcher. "Advertisers gain more meaningful relationships with customers, and content owners win because an on-demand environment means more content will be consumed and there will be more effective ways of monetizing content."

Hulu, of course, is a model of how to build a successful digital media business, offering a "classic" version for limited catch-up and content catalogues from its principal shareholders for PC only, and HuluPlus, a multi-screen all-you-can-eat version for subscribers.

Larcher provided stats revealing that from launch in autumn, 2007, the site was attracting 30 million unique users a month, streaming 860 million videos and 1.1 billion ad streams a month to compile 2010 revenues of $260 million (95 percent from the ad-supported free version).

It's a model which is currently only in the US and which has been given a leg up by the sterling value of its content from Fox, NBC, and Disney. It's Larcher's job to expand the business internationally, but he recognizes that getting such premium content in other markets is no easy task.

"We're very interested in expanding in Latin America, Asia, and Europe, and the biggest factor is not the technology, since Hulu was designed to be global from the outset. The biggest challenge is access to content. We also work with 250 content partners aside from the main studios so we can leverage part of those relationships, but it's got to be a great content experience from day one and unless we see a way to secure that content on reasonable economic terms, it's hard for us to enter new markets."

He added that Hulu was down the track with content partners in several countries but declined to name them.

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