Hulu is a free, ad-supported content provider, delivering viewers with instant online access to full episodes, clips and movies. Like most media content providers, Hulu’s main revenue driver is advertising. In order to generate, sustain and grow its revenue stream, Hulu strategically derives competitive advantage from a portfolio of relationship with TV networks and studios. Conceived by media giants News Corp. and NBC, and recently adopted by Disney/ABC, Hulu has extensive access to current shows and contents from its three largest equity stakeholders as well as additional sources such as CBS. Competitors, especially those independent of TV networks, cannot amass the same wealth of free content, as they cannot replicate the same network relationships that drive Hulu’s business model. In essence, Hulu’s familial relationships significantly decrease its cost of “inventory”, or media content: Hulu leverages the aggregate scales and bargaining powers of its iconic-branded “parents” and accumulates a massive library of over 800 TV series, via 190 content providers, and 450 movies. Furthermore, Hulu gains access to competing distribution channels such as Comcast as a provider of shows from Fox and NBC.
In managing and growing its relationship-based “ecosystem”, Hulu is strategically positioned as a proprietary-standard orchestrator. In addition to Comcast, Hulu expanded its distribution network to include huge portals such as AOL and Yahoo, whereby Hulu content is distributed through embedded Hulu Players and revenues are shared. As an orchestrator, Hulu profits from anyone utilizing its platforms to watch videos, whether it be complementary organizations or competitors, such as YouTube: by the end of January 2009, Hulu quadrupled traffic, with virtually zero advertising expenses. Nevertheless, Hulu only supplies proprietary contents through its platforms, such as its Hulu Player, in order to keep legal control of the contents distributed through different channels....
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