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When Hulu was launched five years ago, it set to revolutionize the whole television industry. The traditional television industry was made up of cable networks that squeezed millions out of viewers every year. Hulu came up with a service that was so basic and unexpected that it caused ripples in the entire industry.
Five years down the line, Hulu seems to be more of a traditional television station rather than an internet pioneer. The company was formed by five of the most powerful industry players as a backside solution to the outrageous cable television charges. The companies that formed Hulu include; the News Corporation’s Fox Broadcasting unit, Walt Disney Company, Providence Equity Partners and Comcast’s NBC Universal unit. Hulu provides legitimate internet streaming of the hit television series and reality shows at a lower charge than cable television. However, these shows are uploaded on the internet after being aired on cable television.
As an online television channel, Hulu has had unprecedented success. On 13th April 2012, Hulu announced that it had surpassed two million clients for its $8-a-month Hulu Plus package in the first quarter of the year.This reflects half a million more than it had at the end of 2011. The online television station has tripled its audience and viewership. According to figures compiled by the statistics company com.Score, Hulu had returns of $420 million in 2011, an increase of sixty percent from $263 million in 2010. As a result of increase in subscriptions, owners of the company expect to earn more than half of their total revenue from Hulu plus service. This is a low-cost television bundle that airs popular television series such as Fringe, A day in the life of, Nikita and other captivating shows. This package is targeted at young adolescent viewers and techno-savvy adults who enjoy watching television online.
Other than its strong financial backing and being owned by prominent television executives, Hulu also makes money from changing trends and its ability to adapt quickly. For instance, the company is accredited with accelerating on-demand television viewership. Hulu has been able to harness the information it receives from viewer habits to profile and summarize patterns. This is due to the innovativeness and creativity of employees of the company. With its store of data, Hulu can predict the likes and dislikes of viewers. This information is traded to media and other advertising firms. Hulu, unlike its main competitor Netflix, streams most of its shows free of charge with advertisements attached thus opening them to a much wider audience. This strategy has made Hulu a favorite for thousands of online advertisers.
However, the success of Hulu has not been without challenges. It faces an equally strong competitor, Netlfix, for online television streaming. In a bid to step up competition, Hulu has had to start purchasing original series and scripts for its shows. This has created friction with some of its parent companies such as FOX tv and NBC. This is because Hulu is now seen to be in direct competition with its owners. Providence Equity, one of the parent Companies of Hulu are also planning to leave the company this summer due to internal wrangles and conflict of interest.
Hulu also faces stiff competition from youtube, which is owned by google. The competition is mainly for the advertisement and viewership market. Online advertising is set to increase by approximately twenty three percent in 2012. Many companies are fighting for this increase in revenue from the advertising sector. The exit of some of Hulu’s chief executives and founders, Jeff Zucker of NBCUniversal, and Peter Chernin was also a tremendous blow to the online television bradcaster.