Hulu’s Home: Yahoo vs. Google

Landing Hulu would seemingly be the Hail Mary Yahoo so desperately needs. But for in-limbo Hulu, Google would be a far better match.

That’s assuming, of course, that Hulu is worth buying at all. Obviously, Hulu is only worth something to Yahoo or any other buyer if its network-TV-rights deals come with it. That is being discussed, according to AllThingsD.com, which reported that offers from Hulu’s various suitors are due next week (with Yahoo’s bid in the neighborhood of $2 billion). But the nature of those rights deals is changing rapidly, given the industry-wide push toward authentication and windowing. Witness Fox’s recent decision to require users to prove they pay for cable to watch their shows online — at least for the first eight days after they air. Hulu isn’t Hulu anymore if it’s not a place to catch last night’s shows (but instead last week’s shows, if that).

Still, Yahoo would be able to live with that, simply because it so desperately needs a winning move. Snatching up Hulu might even get Wall Street off its back, change the drumbeat of conversation from Bartz’s future, declining search revenue, China issues, ad sales mess, employee exodus, etc, etc. Buy Hulu, and the talk surrounding Yahoo becomes, “Wow, look who just scored a big win.” Maybe, finally, Hulu would allow Yahoo to forget about defining what it is and instead embrace what it’s best at: being a digital media powerhouse.
Here’s the case in a nutshell. Hulu puts Yahoo back at the top of the list for brand dollars, a position it has lost. Hulu is as close to a must-buy as there is in digital media — and it would represent real access to TV buyers and TV money. Hulu also meshes well with Yahoo’s ambitions in original video. The portal has scored several hits with highlight shows and sports series, but is looking to develop scripted series and make a play for upfront budgets. Obviously, Yahoo knows how to promote video — but wouldn’t an original scripted drama fit better alongside an episode of House than a clip from “Who Knew?”
And, of course, there’s the case it won’t work. For one, Yahoo doesn’t exactly have a great track record on acquisitions (see Maven Networks). Hulu could easily whither from neglect. It’s also fair question as to whether Yahoo’s sales team would know how to sell Hulu. Selling premium spots within network dramas is miles away from homepage takeovers. And then there’s the Yahoo malaise. Let’s face it, Yahoo doesn’t exactly exude innovation nowadays. Could Hulu thrive there? Could CEO Jason Kilar?
Google, however, would seem an ideal home. First and foremost, Google has the world’s biggest firehose of attention. Just look at its impact on Vevo. That site, launched in December of 2009 as a joint venture between Universal Music Group, Sony Music and the Abu Dhabi Media Co., now reaches over 66 million unique users, making it the second largest video site on the Web and 14th largest property overall, per ComScore. Vevo’s a terrific product with some fabulous content — but let’s face it — it’s been built using the primest of prime real estate on the Web. The site is YouTube’s default for all music searches.
Hulu, for all its heat, isn’t even a top-50 ComScore site. Its growth peaked over a year ago, and it’s been stuck on 24 million or so uniques for a while. But YouTube could launch Hulu into the stratosphere. If a deal happened, Google would be smart to ditch its amateurish “shows” channel, with its odd junkpile mix of forgotten shows like Dark Shadows and Thundercats — and install Hulu as its default premium-viewing experience. Traffic would soar. Plus, YouTube’s fledgling rental business suddenly receives about a million or so subscribers courtesy of Hulu Plus. That also gets YouTube on a lot more TV screens (via Xbox, Roku, etc.). Suddenly, challenging Netflix isn’t so crazy.
Lastly, for a site aggressively courting Hollywood creators and brand dollars, Hulu would bring YouTube newfound gravitas. If you are Lionsgate or Creative Artists Agency or Paramount, Hulu’s quality environment and premium CPMs coupled with YouTube’s reach makes the property far more attractive. Certainly more attractive than Yahoo.
Both these arguments hinge on one very important consideration: Which would Hulu’s owners/content providers prefer? For the most part, networks have had a cordial, if not warm relationship with Yahoo. Its portal model was one they understood and could work with. Google, on the other hand, has raised fears far and wide, with its role as the arbiter of consumer attention. Add to that the antagonism over YouTube building its huge audience in part — how much is up for debate — on pirated content, and Yahoo might be the preferred destination — even if it’s not the right one.
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