After weeks of speculation, The Walt Disney Company is joining the Hulu online video venture as an equity partner through its subsidiary ABC Enterprises. It means that current and library broadcast network programmes like Lost and Desperate Housewives will be available for streaming through the Hulu web site, supported by advertising. With three of the four main networks on board, it significantly strengthens the position of Hulu as the pre-eminent portal for broadcast programming, leaving CBS pursuing its own online distribution strategy.
The structure of the deal has not been announced, but it appears that Disney will take a stake of between 25% and 30% in the Hulu joint venture, reported by some to be 27%, in parity with the founding partners NBC and News Corporation. Disney will gain three seats on the board, in return for a relatively modest cash investment and a commitment to contribute programming.
The existing network partners have also extended their exclusivity agreements with Hulu by a year, giving the site time to firmly establish its position.
ABC already makes its programming available though Apple iTunes and through the ABC.com site. Bob Iger, the chief executive of Disney, described the move as “the next important step in that ongoing journey”. While ABC shows will continue to be available on its own site, syndication through Hulu will enable them to reach a wider audience, while retaining a greater share of any advertising revenue.
Jason Kilar, the chief executive of Hulu, said that his team is “over the moon”. He described the cultural fit with a company that has inspired the focus of Hulu on delighting its customers.
“Hulu, quite simply, now has the best premium content on the web,” said Peter Chernin, the president and chief operating officer of News Corporation.
“Hulu has shown that if you make quality content available on the web and combine it with an unbeatable user experience, viewers will come, and so will advertisers,” said Jeff Zucker, the chief executive of NBC Universal.
Hulu will therefore aggregate programming from ABC, NBC and FOX, leaving CBS currently offering its programmes on the TV.com service it acquired when it purchased CNET, from which Hulu subsequently withdrew its programming.
CBS has so far declined to join the Hulu joint venture, saying that it has long employed open, non-exclusive programming partnerships that allow it to control its own distribution, sales and revenues. It said “controlling our own rights for that content–in all media–preserves its value in a multi-platform business system.” However, it may only be a matter of time before CBS joins Hulu, assuming that it can negotiate a deal on equal terms to Disney.
While strengthening Hulu, the deal with a blow for YouTube, owned by Google, which has failed to secure significant distribution deals for network programming.
Within 18 months, Hulu has become the third most popular video site on the web and the leading site for full-length shows. Hulu is currently only available in the United States but is planning to partner to offer similar services in other countries.
The addition of Disney and ABC to Hulu also upsets the Apple cart, after a pioneering agreement to offer programmes for rental through iTunes. Apple appears to have had less success replicating its success with music, while sites like Hulu have made programmes freely available, supported by advertising. As a result, Apple TV has remained something of a hobby.
Cable companies are meanwhile planning their own TV Everywhere and Online On Demand plans to allow subscribers to watch shows that are already part of their subscription package.
Although Hulu has succeeded in creating an atypically positive user experience on the web, the challenge of extending this to the main television screen remains.