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Hulu May Morph into an “Online Cable Operator”

If you’re a fan of web-based TV service Hulu, you’re not alone. The company reported revenue of over $260 million in 2010, more than twice its $108 million haul in 2009 — and it managed to turn its first profit. But Hulu doesn’t have room to breathe easy yet: At $2.16 billion, its rival Netflix had nearly ten times Hulu’s revenue in 2010, and perhaps more pressingly, Hulu could lose or see restricted some popular free content from Fox and ABC, whose parent companies, News Corp. and Disney, are reportedly “mulling whether to wait two weeks or more after a TV episode airs before making it available free online,” and, to add insult to injury, may ramp up their sales to Hulu’s Internet-delivered TV competitors Netflix, Microsoft, and Apple.

Which could explain why Hulu refuses to rest on its laurels: According to the Wall Street Journal, Hulu execs are considering a radical switch in the company’s direction, which would see Hulu as a sort of “online cable provider.”

In what would be a major shift in direction, Hulu management has discussed recasting Hulu as an online cable operator that would use the Web to send live TV channels and video-on-demand content to subscribers, say people familiar with the talks. The new service, which is still under discussion, would mimic the bundles of channels now sold by cable and satellite operators, the people said.

Hulu’s managers say tumult is natural in such a fast-changing industry. “When we blaze trails, which is what Hulu is about, it takes time,” said Jason Kilar, Hulu’s chief executive, in an interview. “That is not for the faint of heart, and we understand that.”

The question remains, though, how many people would pay for such a service, and, relatedly, how much juice would the networks that own the shows be willing to give it. I’ve previously expressed my opinion that Netflix Instant is simply a much better value than Hulu Plus; a solid live offering could seriously distinguish Hulu from its competitors, particularly among a younger generation that doesn’t want to pay for cable if it doesn’t have to. What would a cable-like Hulu need to have to be worth it?

(WSJ via Engadget)

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