Hulu is trying to migrate it business to a bigger model. It is trying to offer a cable TV like package subscription to users where they can pay once and see it all. Hulu is planning to include all major genre as well as channels to its catalogue, add an on demand service and then sell the whole package to users for a fixed amount. It is a great deal for users since if they pay around $40-60 once a month, they would not have to worry for more subscription of channels. They would already have got the best package and could see everything.
Rating companies like JP Morgan and Morgan Stanley have heightened the rating of Hulu and Credit Suisse has valued the company at $25 billion already. There are some key points which Hulu is keeping in mind to ensure a fool proof success rate in this business. There are some points which Hulu is following and some of the execs explored with us all of them since Hulu is working on this project from 3 years and they know it inside out. So most of these 3 points are:
- As Hulu did a lot of market research, their strategy includes covering live stuff. It is the live stuff which brings most of the new users and retains old ones. While users have to pay for season passes and streaming live, Hulu has tried to add channels like ESPN and live streaming has been enabled once a payment per month has been made. Live viewing of news and sports is what Hulu is focusing on first.
- On Demand has always been a feature of internet TV which cable could not offer at low prices and instantly. Hulu, though mitigating to a cable like structure is adding on demand TV which would be chargeable separately but is added. Netflix Live is one of the many names in this chargeable internet TV service.
- Some content from Disney and Viacom and many such production houses was not considered to be of importance when it came to live broadcasting so they had to be removed from the list of channels included after a lot of market research. Since live coverage takes more resources, instead of them, season rewinds and archives have been added to see what is missed in live events.
Credit Suisse has already mentioned that at a price of $40 per user and Hulu’s user base, it can easily have margins of roughly 25%.