Hulu
All quotations and references refer to “ Hulu: An Evil plot to Destroy the World” unless otherwise noted. 1) Hulu succeeded while everyone predicted its failure due to the following reasons:
* Hulu harnessed existing technologies namely online video and broadcast media to create a new platform that was “focused on helping users find and enjoy the world’s premium, professionally produced content when where and how they want it”. The platform brought together professional content owners/providers, advertisers and content consumers/users in a platform mediated network. * Rather than choose to be a destination site or syndicate content, Hulu chose to be both by being an aggregator of online video. There were web sites that did this for user generated content but Hulu was a leader in this space for professionally generated content. * The business model for Hulu’s platform is 100% advertising supported. * Hulu’s platform model consists of 3 nodes – content providers, advertisers and users * The ‘subsidy side’ in this network is the users who use the platform for free while the ‘money side’ is the advertisers who pay Hulu for running their advertisements. Hulu on the other hand pays content providers for showing their content on the platform. The more the number of users on Hulu the more advertisers value the platform and are attracted to advertise on it. Also, the more the content available on Hulu the more users are attracted to the platform and subsequently, the more the revenue that can be generated from advertising. * Hulu leveraged the cross side network effect between content providers and users by partnering strategically with over 170 content providers including the most popular broadcast and cable networks in the United States. The content providers “participated in the value created through the distribution of their content”, providing the incentive for them to continue their support of the Hulu platform. * Hulu partnered
* Hulu harnessed existing technologies namely online video and broadcast media to create a new platform that was “focused on helping users find and enjoy the world’s premium, professionally produced content when where and how they want it”. The platform brought together professional content owners/providers, advertisers and content consumers/users in a platform mediated network. * Rather than choose to be a destination site or syndicate content, Hulu chose to be both by being an aggregator of online video. There were web sites that did this for user generated content but Hulu was a leader in this space for professionally generated content. * The business model for Hulu’s platform is 100% advertising supported. * Hulu’s platform model consists of 3 nodes – content providers, advertisers and users * The ‘subsidy side’ in this network is the users who use the platform for free while the ‘money side’ is the advertisers who pay Hulu for running their advertisements. Hulu on the other hand pays content providers for showing their content on the platform. The more the number of users on Hulu the more advertisers value the platform and are attracted to advertise on it. Also, the more the content available on Hulu the more users are attracted to the platform and subsequently, the more the revenue that can be generated from advertising. * Hulu leveraged the cross side network effect between content providers and users by partnering strategically with over 170 content providers including the most popular broadcast and cable networks in the United States. The content providers “participated in the value created through the distribution of their content”, providing the incentive for them to continue their support of the Hulu platform. * Hulu partnered
References: Andrew McAfee &Erik Brynjolfsson (July-August 2008). What Makes a competitive difference. Harvard Business Review, pg 100.