Company Case 1
HULU: TURNING AN OLD BUSINESS MODEL
INTO SOMETHING COMPLETELY DIFFERENT
When Jason Kilar was a boy, he rushed home from school
every day to watch his favorite TV show, the anime classic
Speed Racer. Like millions of other kids, he couldn’t wait to watch the hero’s slick Mach 5 take on villainous rivals in equally enticing race cars. The show came on at 3:30 p.m. If he was late, he missed it. Back then, there were no VCRs or DVRs to record the show for later viewing. There was no Internet. Like everyone else at the time, Kilar had to watch TV on the schedule dictated by the networks.
Perhaps that’s why when Kilar grew up, he set out to change that antiquated model of television watching. By the time Kilar had reached the ripe old age of 36, home-recording devices had been household fixtures for well over two decades. But as far as Kilar was concerned, having to think ahead and set a device to record a show was still too much work. That’s why accepted the task of running Hulu, a joint venture by media giants NBC Universal and News Corporation that serves up
TV shows and movies through a slick Web interface, when and
wherever you want to view them. As Hulu began to take shape, speculation quickly turned to skepticism.
What’s a Hulu? In August 2007, this question ricocheted
through the blogosphere to a chorus of derisive laughter. NBC and Fox [News Corps’ TV broadcasting subsidiary] were going to make the Internet safe for television! They were building a “YouTube killer”! And they were calling it Hulu! It was almost too perfect—an absurdist topper to the idea that two major broadcast networks could devise an Internet video service people would actually use.The name was even more delicious than the venture’s placeholder moniker, NewCo, which the online world had changed to ClownCo.And now Hulu? It means “snoring” in Chinese, one blogger declared. “‘Cease’ and ‘desist’ in Swahili,” Michael Arrington reported on TechCrunch. “Perhaps they should have just stuck with ClownCo,” he added.
In Mandarin, hulu actually means “bottle gourd,” or “holder of precious things.” But the word’s meaning doesn’t really matter much. What does matter is that since Hulu aired its first television program in March 2008, it has become the third
most-viewed online video site, and it’s still rapidly growing. Entertainment Weekly called Hulu “some kind of TV addict’s fever dream.” One of the same bloggers who had earlier ridiculed Hulu soon pronounced it “brilliant.” And Mr. Arrington, coeditor of the famed blog TechCrunch and one of Hulu’s
harshest early critics, ultimately declared, “Game over. Hulu wins.” The big question is this: Of all the world’s Web startups and video sites, what has made Hulu such an instant and unquestioned success?
Focus On the Customer
When Jeff Zucker, CEO of NBC Universal, and Peter Chernin,
president of News Corporation’s Fox network, hired Jason Kilar, they handed him a relatively empty canvas in an industry mired with complexities. Kilar could have set any of a thousand different priorities in creating Hulu. But Kilar focused first on one primary priority that would guide the entire venture: the viewer. He insisted that Hulu be “obsessed with users.” If Hulu didn’t work for viewers, they simply wouldn’t tune in. Kilar wanted to capture the best parts of watching television the oldfashioned way and combine them with the best that modern technology could offer. He and his Hulu team considered all the barriers to watching television and movie programming via the existing options and then set out to squash them.
Hulu is Web based, so it overcomes two of the most common
inconveniences to watching regular TV It’s available 24/7, and .
it doesn’t require that viewers set a device for recording. But all Web video sites offer those advantages. Beyond these basics, to ultimately draw people away from their TV sets to watch their favorite shows online, Hulu had to offer more. So...