Disney and Hulu Make Pact
After months of rumors, it’s official. Disney has hopped on the Hulu bandwagon. Subject to regulatory approval, Disney will take an equity stake in the video aggregrator/distributor alongside News Corp, NBC/Universal and Providence Equity Partners (which bought its stake in 2007).
In exchange for the equity, Disney will give Hulu the rights to broadcast full length programs from ABC’s catalog including Prime Time hits, and classics. Access will span the ABC Family, SoapNet, ABC and Disney Channel brands.
The deal will put three major networks (NBC, ABC and Fox) side by side in a joint video distribution platform. When it comes to online distribution of feature length TV content, the deal will make Hulu, “Network 1.”
That may not bode well for YouTube and its aspirations of adding feature length programming to the clips and snips that have built it into the web’s leading video portal. Though YouTube got a consolation prize in its own recent deal with Disney, it’s hard to see the networks embracing, or supporting, a rival service they’re not stakeholders in beyond what may be necessary to keep regulators from the words “potential monopoly” on their dockets.
That’s not to say, though, that Hulu viewers will be likely to find a vast and deep library of Disney (ABC) content always available. Like the other partners in the Hulu venture (and those licensing content), Disney will likely provide many programs for limited windows while at the same time, continuing to host video streams at its own sites. An episode of Scrubs or Grays Anatomy might air on-demand at Hulu for a few weeks before being replaced by something else.
Hulu will likely be, in effect, a test market where Disney can explore the value of ad supported video streams on properties other than its own. If the model works, and traffic flows, it will gain further traction. If it doesn’t, the Mickey Mouse Club will parade back to Walt’s house.
With the equity stake, Disney will take three board seats at Hulu alongside the representatives from Providence Equity, NBC Universal and News Corp. The Disney chairs will be filled by Disney CEO Bob Iger, Anne Sweeney, co-chair and president of Disney Media Networks and Kevin Mayer, executive vp of corporate strategy.
Speaking of the deal, CEO and President of NBC Universal, Jeff Zucker, said, “Hulu has shown that if you make quality content available on the web and combine it with an unbeatable user experience, viewers will come, and so will advertisers.” That’s probably true. Even more certain, the deal’s a win for Hulu and cause of concern for cable operators like Comcast (who have their own video on demand plans), and the odd network out, CBS.
[GRAPHIC UPDATED May 28, 2009. – Also - Hulu is now experimenting with a standalone player. See related coverage]
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