Jason Kilar, the founding chief executive of Hulu, has announced that he will be leaving the company within three months, together with chief technology officer Richard Tom. Despite or perhaps because of its outstanding success as an online video platform, there have always been tensions between its corporate partners over strategic direction.
The chief executive of Hulu said: “Rich and I have been fortunate to build and innovate alongside each other these past 5+ years and our plan is do more of that on the road ahead”. He added: “My decision to depart has been one of the toughest I’ve ever made.”
The online video venture was announced in March 2007, with the original intent of distributing through third party sites. Jason Kilar, who previously developed the business plan for Amazon to enter the online video field, was announced as chief executive in June 2007. Following a period of invitation only testing, Hulu.com opened to the public in March 2008.
Originally a joint venture between the parents of the NBC and Fox television networks, the owners of ABC joined in April 2009.
Its corporate parents have had an apparently ambivalent attitude to the surprising success of the online video venture. The fear is that despite its popularity with users, the success of Hulu threatens to devalue lucrative legacy distribution agreements.
News Corp, which controls Fox, is understood to prefer a subscription model, while Disney, which controls ABC, is said to favour a free-advertising supported service featuring recent shows. Comcast, since its acquisition of NBC, is required by regulation to be a silent partner in Hulu. CBS declined to join the venture, preferring to control its own distribution arrangements.
As chief executive of a startup with powerful parents that control the distribution of programming on which it depends, Jason Kilar has no doubt had a tough time negotiating the future strategy for Hulu.
Since arriving to an empty office in July 2007 as head of a project initially dubbed Clown Co, he presided over the growth of the business to a team of over 600 staff, generating almost $700 million in revenue in 2012, up 65% on the previous year, although it remains a loss making operation, spending half a billion dollars on programming.
Hulu now has over 400 partners, providing over 50,000 hours of programmes, with 60,000 episodes of 2,300 television series available to view.
The venture closed the year with over three million subscribers to Hulu Plus. It added 200,000 in the last seven days alone, no doubt as a dividend of the holiday season.
Now available on a wide range of devices, Hulu Plus is now accessible on more than 320 million devices in the United States, not including laptop or desktop computers.
While Hulu initially launched as an online service supported by limited adverts, some subscribers to the Hulu Plus service have been critical of the increasing amount of advertising it carries.
Without clarity over strategic direction and strong backing from its corporate shareholders, Hulu faces increasingly tough competition from Amazon and Netflix.
When the original investors Providence Equity Partners sold their ten per cent stake for $200 million in October 2012, it valued the venture at $2 billion, with the share options of its founding chief executive estimated to be $40 million.
One thing it seems the parents can agree on is that Jason Kilar did a surprisingly good job at Hulu and can be expected to do well in his next venture.
Bob Iger, the chief executive of Disney, said: “Jason has been an integral part of the Hulu story, transforming it from an interesting idea into an innovative business model that continues to evolve.”
Rupert Murdoch, the chief executive of News Corporation, said: “Jason and his team have done a great job building Hulu into one of the leading online video services available today and it’s incredibly well positioned for the road ahead. We are grateful for Jason’s leadership and wish him the best on his next venture.”
It will be interesting to see what Jason and Rich do next, who will replace them, and what the future holds for Hulu.