Google would benefit from Hulu, grabbing professional content to serve alongside its user-generated YouTube clips. Think Hulu content across Android smartphones, tablets and Google TV.
There are a lot of questions surrounding Hulu, the rival
video Website backers Walt Disney, News Corp., Comcast and Providence
Equity Partners are desperate to sell.
The most common query is: If the owners sell, who will Hulu, which offers free and paid network TV content, go to? Bloomberg
said Hulu received first-round bids from Google (NASDAQ:GOOG), Yahoo
(NASDAQ:YHOO), Amazon.com (NASDAQ:AMZN), and Dish Network, with offers ranging
from $500 million to $2 billion.
Hulu owners are reportedly prepared to give the
successful suitor five years rights to TV shows, including two years of exclusive
content. Hulu has great intrinsic value; it has 1 million users and is on track
to rack up revenues of $500 million for the year.
analysts like Hulu's value proposition, especially for Google's current business
model and direction for online video, where its YouTube property logged 158
million unique viewers in July.
right into Google's wheelhouse. Not only does Hulu enjoy almost 20 percent of
online video ad impressions served
with just-aired ABC, NBC and Fox TV shows,
but it has a $7.99 per month Hulu Plus subscription model, which would provide
another revenue stream for the search engine.
That subscription fee is the same
Netflix charges each month to stream TV content that is decidedly dated.
continue to believe that Google is the most likely suitor, and one that could
pose the biggest challenge to Netflix," wrote Jefferies & Co. analyst
Youssef Squali in a research note.
Forrester Research analyst James McQuivey noted that
Google could use Hulu to improve the way it makes money from video content. The
company's YouTube platform is the biggest video distribution engine on the
planet, but Google only makes money from display ads served with YouTube clips.
YouTube content is free, but people don't watch it for
very long and are not as engaged with the user-generated clips as they would be
with a popular prime time show. Google has been trying to get users sticking
around, offering more professional content, launching YouTube Movies
with access to more than 3,000 titles earlier this year.
Why Google has tried for years to get access to prime
time shows Hulu enjoys it has been stymied for a petty reason. TV networks who
own this content "hate Google," said McQuivey.
"Google is never overcoming its reputation and
programmers are not willing to sell them rights to content in an advantageous
way," McQuivey added. "For Google, (Hulu) is their one shot to take
the world's most viewed video platform in YouTube and add to it, at least for
the U.S. market, incredibly valuable, professional content everyone wants to
It's not as cut-and-dry as that. Fox and other Hulu owners
pick and choose what rights Hulu has for content, as they jockey for
competitive positioning even within their flagship partnership. Some
shows are available on Hulu Plus that aren't available on the basic,
free Hulu service, creating a sticky copyright maze.
But it's still
professional content YouTube has fought hard to secure access to online.
Moreover, Google has its Android business to think about.
Consumers love to access TV and movies from smartphones and tablet computers
while on the go. Google also has its Android-based Google TV platform to think
If Google could put its YouTube user-generated content
alongside Hulu's professional shows on Android gadgets, Google could be a "video distribution powerhouse,"
"I think Google would value Hulu at a higher price than anyone else," he added.
Not so fast, though. Hulu CEO is Jason Kilar, a former Amazon executive, has ties with Amazon CEO Jeff Bezos. Amazon could get Hulu to boost its TV services
, integrating Hulu content onto its forthcoming 7-inch Android tablet