One of the hardest things to process about the Hulu acquisition is the buyer price, the real money is the content on Hulu and the content providers may pull out as soon as they are not owners.
When Hulu was created, it was made to be the streaming service offering all the exclusive content for users, but it quickly became second best to Netflix.
News Corp, Comcast and Disney all own Hulu and they add content exclusively to the service, but it seems all three are ready to sell and will offer some kind of content incentive for the user, like one or two years they will keep exclusivity.
The question is, how much does Hulu cost once the content is not exclusive and the owners are on the same ground as Netflix and Amazon Prime and can the owners work to make Hulu a better service.
Last time the company went up for sale, it got bids from Dish, Amazon, Google and Yahoo, ranging around $1.5 – 2 billion, but they decided to not accept any and keep the business going.
Now they are back for sale and have gained bids from DirecTV, Time Warner Cable, KKR Guggenheim Digital, The Chernin Group, Silverlake Partners and Yahoo. Some of these you won’t know, this is because they are private equity groups.
Hulu still has a price of around $2 billion and we expect some to bid up to $3 billion. Yahoo has just come off the back of acquiring Tumblr, but Marissa Mayer wants to create a content ecosystem and Hulu may be a good purchase.
While we can see the value of Hulu, an excellent streaming service on multiple platforms, the key is content. Netflix and Amazon spend $2 billion a year on content and both are dropping down with more original programming.
The buyers of Hulu will need to rush to employ studios to create some exclusive and original content, as well as keeping good deals with the three major content providers on Hulu.
It will be a hard road for the buyers and while it may be successful, it may not work out for the buyers and in five years we may see Hulu up for sale again, although we doubt it will come with the premium price-tag.
