Hulu gained momentum last week in its quest to be the likely de facto destination for top-shelf, full-length TV programming online, much the way Google has long been the Web's top search portal.
That looked likely even as Disney's ongoing talks to buy a stake in Hulu—a joint venture of NBC Universal and News Corp.—sparked debate at The Cable Show in Washington, D.C., over how best to monetize online video.
The biggest questions in sorting out Web video strategies are exclusivity and whether an industry-wide plan is necessary. Hulu is emerging as a possible hub for the majority of longform TV content online. But Time Warner CEO Jeff Bewkes, who elaborated at the show on his “TV Everywhere” concept, is a vocal opponent of online exclusivity at a portal like Hulu.
“If you're a brand like ESPN or CNN or Disney and you want to get your content to the people, why would you put it in just one place?” Bewkes told B&C last week.
Senior industry executives suggest that Disney is negotiating for a stake in Hulu of between 20% and 30%. Currently, Providence Equity Partners owns 10% of the venture alongside NBCU and News Corp, which split the balance. But such a deal risks upsetting cable operators who argue that they are paying for programming that is given away online. In the same way, ABC affiliates were upset with Disney in its pursuit of a pact with Apple's iTunes; Apple's CEO, Steve Jobs, sits on Disney's board of directors.
A deal would be a gamble for the company that essentially pioneered the online video business with ABC.com in 2006. Another bone of contention: Hulu wants the exclusive right to conduct ad sales around the online programming.
“We can't just stay with the old formula because people are afraid,” Jeff Gaspin, NBCU's TV Group president, told B&C last week. “Nothing we have learned scares us.” NBCU's view is that consumer viewing of missed episodes online helps maintain viewer loyalty.
Bewkes contends that viewer loyalty comes with keeping TV content accessible anywhere consumers are—while making sure operators benefit. His plan for monetizing online video is to have customers prove they are cable subscribers before they can access content. That would help protect premium pay channels such as HBO and mitigate “cord cutting” by consumers who ax cable and watch online instead. Other companies, too, have been exploring this idea of authentication.
Also in the mix is CBS Corp., which owns TV.com, a viable competitor to Hulu. One line of thinking within CBS is that the network's ratings haven't fallen as much as those of their broadcast rivals because the company is much more selective about what it puts online. Meanwhile, CBS is also continuing talks with Hulu about becoming a partner in the venture, although talks have stalled over Hulu's desire for exclusivity.
Yet to fully weigh in on the debate was Google. Last week, Disney agreed to a deal to let Google's YouTube show short-form Disney content. But a unification of the traditional TV business around a single vision, whether it be Time Warner's or Hulu's, could leave Google-YouTube—the proverbial 800-pound gorilla—with a much smaller slice of the TV programming pie.
With Marisa Guthrie