Why Disney took a stake in Hulu
Disney is taking a 30% stake in the online video Web site Hulu. What's in it for Disney? Jennifer Collins reports.
A screenshot of a Disney search on online video Web site Hulu (hulu.com)
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Kai Ryssdal: For all the billions of dollars in revenue the Internet has delivered to those who've unlocked its secrets, for a lot of the big entertainment companies, the Web hasn't quite lived up to its financial promise. But that hasn't stopped them from trying. Today Disney said it's going to buy a 30 percent stake in Hulu.com, that's a video-streaming site now owned by NBC Universal and News Corp. Disney, which owns ABC, is going to put its movies and full-length TV episodes on Hulu to let consumers watch for free. Provided they don't mind putting up with some ads. Marketplace's Jennifer Collins reports.
JENNIFER COLLINS: During the Super Bowl this year, actor Alec Baldwin introduced millions of Americans to this one stop shop for video online.
ALEC Baldwin: Hulu beams TV directly to your portable computing devices giving you more of the cerebral gelatinizing shows you want. Any time, anywhere for free.
And it seems Americans have tuned into that cerebral gelatinizing stuff. Last month, Hulu.com showed 340 million videos from network TV, cable and others. That makes Hulu the number two video site, behind YouTube. Anne Sweeney heads up Disney's television operations which include ABC.
ANNE Sweeney: They became someone that we wanted to be in business with.
She says the hope is Disney will bring viewers to Hulu, and Hulu will bring viewers to Disney.
Sweeney: Because there's not a lot of crossover, and we want to tap into those casual viewers.
The deal could drive TV watchers to Hulu for shows like Gray's Anatomy and Lost. NBC and Fox already have shows on the site. Mark Hughes follows online advertising as the CEO of Buzzmarketing.
MARK Hughes: I actually think it's very smart to get all your kinda major content in one spot.
He says Hulu could become a mecca for advertisers. Online viewers can't skip the commercials. And media forecaster IPG expects a more than 30 percent growth in online video advertising this year.
I'm Jennifer Collins for Marketplace.
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From Austin, TX, 05/01/2009
The increasing popularity of Hulu with media producers and consumers seems likely to exacerbate tensions with companies like Time Warner and ATT who are basing growth on triple-play. Pure speculation, but companies like TXU who are already thinking about smart power grid technologies, might consider an alliance that sees the transmission line companies adding broadband Internet to their portfolio of products, thus providing a conflict-of-interest free conduit for Internet TV.
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