Why Can't Google Invest in Hulu? Or At Least Do A Syndication Deal
This story was written by Rafat Ali.
As I have been playing around with Sling.com, the new video portal from Echostar-owned Sling Media, this thought came to mind: if Sling can make a deal with Hulu to essentially create a competitor to Hulu, then why can't Google (NSDQ: GOOG) make a deal with the News Corp-NBCU JV? With YouTube, Google will continue having a tough time doing mainstream full-episode TV deals. I think even YouTube realizes it, as its head of content partnerships Jordan Hoffner hinted in his speech at B&C's OnScreen Media Summit this week: "If people want to see the last episode of Ugly Betty they know they can go to ABC.com, but on the other side, we can compete by getting into everyone's old favorite [TV shows] and feature films ... Given the audience and how big it is, do we essentially become the museum of broadcasting? Do you start doing deals for libraries?" Pretty boring, if you ask me.
The way YouTube is currently tooled and perceived, it will not be a lean-back experience for most users. Hoffner's main message was: "YouTube is a great place for premium content ... But we need to do a better job of creating areas where the user can go and know what they are going to get." And that is the biggest dilemma for the company. Then Google has to deal with YouTube's monetization head on, especially as the next year is going to be a tough slog for everyone.
One way to get out of this rut of sorts is to work with the perceived rival Hulu, and perhaps even look at taking a stake in it. Some eyebrows will be raised from a regulatory perspective if they do a deal, for sure, but assuming that can be dealt with in structuring any deal, it could help both parties: Hulu would be able to get a lot more traffic, and YouTube would be able to get a backdoor deal into mainstream content. And it is not like Hulu has completely figured out the monetization bit itself, despite the hype around it. Should a cash crunch hit because of the changing economic climate, (it raised $100 million from Providence), Google could be a ready investor.
Also, my guess is that the honeymoon that Hulu is enjoying could run into some headwind mainly due to internal politics between News Corp/Fox and *NBC Universal*, fierce rivals otherwise. I have heard some rumblings from the Fox Broadcasting side about how much exposure NBCU's shows are getting through Hulu, as opposed to their own, which may or may not be justified, but could balloon into something more serious in the future. In that case, again, Google could play the mediator and a good ally for Hulu, the independent entity.
Anyway, for now, this is just a trial balloon on my part. Of course, stranger things have happened.
By Rafat Ali