Speaker 1: Welcome to Tech Stuff, a production from iHeartRadio. Hey there,
Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland.
Speaker 1: I'm an executive producer with iHeart Podcasts and how the
Speaker 1: tech are you? So? In our last episode, I covered
Speaker 1: the origins of Hulu, the streaming service that started off
Speaker 1: as a joint venture between NBC Universal and News Corp,
Speaker 1: two competing media companies. So we got up to twenty thirteen,
Speaker 1: which was a tumultuous year for Hulu. Jason Kayler, the
Speaker 1: original CEO for Hulu, the guy who really helped shape
Speaker 1: what Hulu would become, left the company. His interim replacement
Speaker 1: would also leave before the year was over. Mike Hopkins,
Speaker 1: who became the new CEO, had formerly been an executive
Speaker 1: at Fox Networks Group, and so he came from the
Speaker 1: news course of the business. Other changes had also happened
Speaker 1: by that point, right, So Disney joined newscre at NBC
Speaker 1: Universal and became a joint stakeholder in Hulu. This meant
Speaker 1: that three of the four broadcast companies in the United
Speaker 1: States were stakeholders. You had ABC, which was owned by Disney,
Speaker 1: you had Fox, which was owned by News Corp. And Obviously,
Speaker 1: NBC Universal had NBC, so CBS was the only holdout. Also,
Speaker 1: Comcast would acquire NBC Universal, which in itself is a
Speaker 1: very complicated story. Comcasts first announced this deal in late
Speaker 1: two thousand and nine. The initial part of this acquisition
Speaker 1: concluded in twenty eleven after a lot but arguably not
Speaker 1: enough scrutiny from regulators. But Comcast wouldn't get full ownership
Speaker 1: of NBC Universal until General Electric divested its remaining stake
Speaker 1: in the company in twenty thirteen. These things are super complicated,
Speaker 1: but that's pretty much par for the course for media companies.
Speaker 1: If you look back over the corporate ownership history of
Speaker 1: any major media company that's been around for at least
Speaker 1: a decade, it gets messy. Anyway, Comcast becoming the new
Speaker 1: corporate daddy to NBC Universal is why we will later
Speaker 1: be talking about a showdown between Disney and Comcast toward
Speaker 1: the end of this episode. Another big change also happened
Speaker 1: in twenty thirteen that would impact the future of Hulu.
Speaker 1: On June twenty eighth of that year, news Core, which
Speaker 1: was the media empire of Rupert Murdoch, split in Twain.
Speaker 1: That is, newscrep would become two separate companies. Now, one
Speaker 1: of those companies, twenty first century Fox, would include the
Speaker 1: famous twentieth century Fox film studio, the Fox Television Networks,
Speaker 1: and a stake in National Geographic Newscrep would be the
Speaker 1: publishing arm of the company. As part of this divestment,
Speaker 1: Newscrep transferred its stake in hul to twenty first century Fox.
Speaker 1: Now this is the reason we don't have to talk
Speaker 1: about Disney, Comcast and newscre at the end of this episode, because,
Speaker 1: as I'm sure most of you are aware, Disney subsequently
Speaker 1: gobbled up twenty first century Fox in twenty nineteen, which
Speaker 1: means Disney slice of Hulu's high would just get bigger
Speaker 1: and bigger. But I'm getting ahead of myself, so Hulu
Speaker 1: was also changing outside of these big corporate maneuvers. The
Speaker 1: initial business model of Hulu was to offer up ads
Speaker 1: supported viewing of recent television episodes. So as a user,
Speaker 1: originally you would go to the Hulu website, so you'd
Speaker 1: use a laptop or desktop PC and navigate to the
Speaker 1: Hulu website. Keep in mind, this is when smartphones are
Speaker 1: a brand new thing, so using a smartphone to navigate
Speaker 1: the web was still very new when Hulu launched officially
Speaker 1: in two thousand and eight. So you would use a
Speaker 1: PC or laptop to go to Hulu's website and you
Speaker 1: could watch a few of the most recent episodes of
Speaker 1: various television programs that were provided by content partners. Typically,
Speaker 1: you could view the episode that had most recently aired
Speaker 1: on TV anytime between the following day up to the
Speaker 1: following month. It all depended upon the actual agreement between
Speaker 1: the studio and Hulu. We'll talk about that again in
Speaker 1: a bit. You did not have access to the back
Speaker 1: catalog of episodes of any show, didn't matter what network
Speaker 1: it was on. You might be able to watch the
Speaker 1: most recent five episodes, and then on top of that,
Speaker 1: you could potentially have access to around half a dozen
Speaker 1: other episodes from across the entire history of a show,
Speaker 1: but you would have no control over which episodes those
Speaker 1: would be. So maybe you'd know for a show that
Speaker 1: had lots and lots of seasons, like ten or more seasons,
Speaker 1: you might have a couple of episodes from season four,
Speaker 1: and then maybe a couple from season six or whatever,
Speaker 1: but they wouldn't necessarily connect to each other and wouldn't
Speaker 1: be able to say which ones you got to see. Now,
Speaker 1: just a little bit more backtracking before we continue on
Speaker 1: with our story, because there's some elements that I did
Speaker 1: not mention in the last episode. In twenty ten, Hulu
Speaker 1: had introduced Hulu Plus, a subscription based service that let
Speaker 1: audiences access an entire season the most recent season of
Speaker 1: episodes for shows. So you could get access to a
Speaker 1: full season of episodes, not the entire history, but at
Speaker 1: least the most recent season if you were a subscriber,
Speaker 1: and it costs seven dollars ninety nine cents per month.
Speaker 1: Now I believe that on Monday's episode, I said nine
Speaker 1: dollars ninety nine cents. That's because I was pulling that
Speaker 1: from other sources. And to be fair, Hulu has changed
Speaker 1: its pricing throughout its history, but the actual initial price
Speaker 1: when it launched was seven dollars ninety nine cents per month.
Speaker 1: This service was also ad supported, so customers still had
Speaker 1: to go through some ads in order to do this.
Speaker 1: So you're paying you know, essentially eight bucks a month,
Speaker 1: but you also still get ads. So analysts were predicting
Speaker 1: that this subscription model was going to fail because who
Speaker 1: the heck was going to pay to access television programming
Speaker 1: that otherwise they could get for free, although you didn't
Speaker 1: really get it for free. You got in return for
Speaker 1: whatever your cable or satellite package was, unless you were
Speaker 1: actually using antenna to pick up over the air broadcast. Well,
Speaker 1: it turned out that Hulu's method worked pretty well. It
Speaker 1: did not go down in flames as the analysts were predicting.
Speaker 1: In twenty eleven, the service boasted it had hit a
Speaker 1: million subscribers, and Kyler said that the service would bring
Speaker 1: in around two hundred million dollars after it had been
Speaker 1: launched for a year, the subscription service, that is, and
Speaker 1: that's a lot of money. But then Hulu was also
Speaker 1: spending a lot of money securing content partners, right because
Speaker 1: it wasn't just ABC and Fox and NBC that was
Speaker 1: providing content to Hulu. Hulu was securing licenses with lots
Speaker 1: of different content partners out there, and that cost money.
Speaker 1: Cable networks and providers were growing concerned that Hulu was
Speaker 1: cannibalizing their audiences, and there was a lot of friction
Speaker 1: in the media space. So, for example, in twenty ten,
Speaker 1: newscre got into a serious tif with Cablevision, the cable
Speaker 1: provider these two companies were in a fundamental disagreement over
Speaker 1: retransmission fees. News Core was playing hardball and it ended
Speaker 1: up blocking Cablevision subscribers from accessing programming, and that included
Speaker 1: online programming. So if you were a Cablevision ISP customer
Speaker 1: and you tried to go to Fox dot com to
Speaker 1: watch Fox material, or if you tried to watch Fox
Speaker 1: material on Hulu, you would get blocked, which made a
Speaker 1: lot of people mad. And it really made people angry
Speaker 1: that they weren't able to access sports programming because the
Speaker 1: World Series of Baseball was coming up and Cablevision was
Speaker 1: trying to hold out from having to pay higher retransmission.
Speaker 1: This one battle really just encapsulates a much larger story
Speaker 1: of traditional media versus streaming media. And keep in mind,
Speaker 1: it's kind of funny because traditional media companies were the
Speaker 1: owners of the streaming service Hulu. So again, very complicated.
Speaker 1: Television had been king for decades, but the cord cutting
Speaker 1: trend was really emerging big time. It would only get
Speaker 1: worse down the line. Here's a fun side note. Around
Speaker 1: the same time, CNN reached out to me to comment
Speaker 1: on the trend of cord cutting. So I did I
Speaker 1: gave CNN some information about cord cutting and like the
Speaker 1: trends that were going on at the time and the
Speaker 1: reason for those trends. And I got a talking too,
Speaker 1: because at the time, the company I worked for, house
Speaker 1: stuff Works, was owned by Discovery Communications, a cable channel
Speaker 1: company cable network company, and Discovery did not like that
Speaker 1: I was talking about cord cutting, as if some how
Speaker 1: I was affecting cord cutting, as if I was responsible
Speaker 1: for it. I was commenting on something that was happening,
Speaker 1: whether I talked about it or not. And I'm pretty
Speaker 1: sure that I was not the reason A bunch of
Speaker 1: people suddenly said, you know what, You're right, it is
Speaker 1: time we stopped paying cable. So I still think it's
Speaker 1: funny that I was talked to about this and that
Speaker 1: it was a whole thing because I'm like, you guys
Speaker 1: are treating me like I'm way more important than I am,
Speaker 1: and if I am this important, you need to pay
Speaker 1: me more. Right. That's the lesson you learned, is that
Speaker 1: if I'm important enough to be a threat to your business,
Speaker 1: I'm important enough for you to pay me more money. Anyway,
Speaker 1: that was a tangent side note, doesn't really matter. The
Speaker 1: TV based businesses were desperately clinging onto a model that
Speaker 1: was just going out of style. Thus the talking to
Speaker 1: I got so my personal opinion is that the decline
Speaker 1: of broadcast and cable television was inevitable. That nothing that
Speaker 1: these companies did was going to stop that decline. It
Speaker 1: was just going to happen. So all they could really
Speaker 1: do is try and slow things down as much as
Speaker 1: they could, or to make things difficult on streaming platforms
Speaker 1: which were kind of in an investment and growth mode,
Speaker 1: or the traditional companies could try and create their own
Speaker 1: strategies to segue into the streaming model, the internet based
Speaker 1: model of delivering entertainment. A lot of those media companies
Speaker 1: resisted that, or they tried to buy up companies that
Speaker 1: were kind of already doing that and use that as
Speaker 1: their on ramp. Hulu itself was kind of an on
Speaker 1: ramp for that kind of thing. But because these streaming
Speaker 1: services were in investment and growth mode, it meant they
Speaker 1: were not focused on making a profit at this time.
Speaker 1: That was not the main goal of the early years
Speaker 1: of these services. They were trying to establish a large
Speaker 1: customer base and to scale as quickly as possible. This
Speaker 1: was really bad news for the cable industry because it
Speaker 1: meant that this new competitor was willing to operate at
Speaker 1: a loss. Right, They were not operating with fear of
Speaker 1: how it was going to affect their profits because they
Speaker 1: weren't profitable. They were operating at a way of gaining
Speaker 1: new customers. But the cable industry was looking at a
Speaker 1: shrinking customer base and angry shareholders. So they were in
Speaker 1: a very different situation, and it was a pretty volatile situation.
Speaker 1: We're technically still kind of in that situation, but at
Speaker 1: this point, I think most folks acknowledged that cable TV
Speaker 1: is seriously on the decline. In fact, you know, Kyler
Speaker 1: wrote an essay in twenty twenty three, the former CEO
Speaker 1: of Hulu wrote an essay in twenty twenty three that revealed,
Speaker 1: quote linear television declines at a rate of close to
Speaker 1: ten percent per year in the United States end quote.
Speaker 1: And further that quote, the median age for most entertainment
Speaker 1: shows was over sixty end quote. And that is the
Speaker 1: median age for linear television entertainment. So, if you've ever
Speaker 1: wondered why so many TV shows seem to cater to
Speaker 1: the elderly. That's why the elderly are the ones who
Speaker 1: are still watching television in the first place. Kyler also
Speaker 1: said that out of all the streaming platforms in twenty
Speaker 1: twenty three, and there were a ton of them at
Speaker 1: that point, only Netflix quote is generating material cash flow
Speaker 1: from streaming end quote. So Kyler wasn't saying that streaming
Speaker 1: was a doomed business model, and I'll try to come
Speaker 1: back and touch on that. I just really wanted to
Speaker 1: establish the setting that Hulu was part of an early
Speaker 1: wave of streaming services that were changing the way audiences
Speaker 1: access entertainment and ultimately how they would challenge the status quo. Okay,
Speaker 1: we're going to take a quick break. When we come back,
Speaker 1: we'll talk more about Hulu's evolution. We're back. So one
Speaker 1: thing that I failed to mention in the previous episode
Speaker 1: was that Hulu was broadening its access. So again, originally
Speaker 1: when Hulu launched, it was a website full stop. And
Speaker 1: keep in mind, like Hulu launched in two thousand and eight,
Speaker 1: so iPhone comes out in two thousand and seven, we
Speaker 1: don't really get the app store until two thousand and eight,
Speaker 1: so we wouldn't get into a glut of smartphone and
Speaker 1: mobile device apps for a couple more years. The app
Speaker 1: landscape was still kind of on the horizon when Hulu launched,
Speaker 1: so the one way you could access Hulu content was
Speaker 1: on a computer, though if you were willing to put
Speaker 1: in the work, you could technically use a television as
Speaker 1: a display and watch content on television that way, but
Speaker 1: that was kind of janky for most people. It was
Speaker 1: beyond the reach of a lot of folks. They would
Speaker 1: wait until there would be more integrated solutions, either with
Speaker 1: streaming boxes or with smart televisions or that kind of thing.
Speaker 1: So you couldn't watch Hulu on television in the early days.
Speaker 1: But a couple of years after launch, Hulu began to
Speaker 1: release apps and work with device manufacturers to make Hulu
Speaker 1: available through other devices, which would include smartphones and tablets
Speaker 1: and over the top services as well as like video
Speaker 1: game consoles and smart TVs. This wasn't straightforward, however, and
Speaker 1: the experience could really leave customers frustrated because Hulu still
Speaker 1: had to secure agreements with all the different content providers,
Speaker 1: of which there were many, so again, Hulu wasn't just
Speaker 1: serving up stuff that could be found on ABC NBC
Speaker 1: and Fox, and not everyone would agree to all the
Speaker 1: terms and they would require specific exceptions. So for some shows,
Speaker 1: viewers might be allowed to access an episode on any
Speaker 1: device running a Hulu app like it could be a computer,
Speaker 1: a smartphone, it could be or television, doesn't matter. But
Speaker 1: for other shows, viewers might only be restricted to the
Speaker 1: web browser version on a PC. So it would be
Speaker 1: weird because you could log into Hulu on your computer
Speaker 1: and watch a show like that, but if you were
Speaker 1: to pull up your Hulu app on a streaming service,
Speaker 1: like on a box connected to your television, that show
Speaker 1: would not be there, and that was really confusing. Also,
Speaker 1: shows would have different premiere dates on Hulu. Some episodes
Speaker 1: premiered the day after they aired on television, some eight
Speaker 1: days after they aired, so the following week. Some had
Speaker 1: a delay of thirty days, so like a full month.
Speaker 1: And this was all over the place, and it meant
Speaker 1: that using Hulu was confusing. This was not the fault
Speaker 1: of Hulu, but because the powerful studios could command these conditions,
Speaker 1: they were the ones that were dictating the terms. They
Speaker 1: felt incentivized to do this because they were, you know,
Speaker 1: they were playing in a new space. Even shows that
Speaker 1: aired on one of the stakeholder networks on ABC or
Speaker 1: Fox or NBC, they weren't immune to shenanigans either. So,
Speaker 1: for example, The New York Times reported that The Middle,
Speaker 1: which was an American sitcom that aired on ABC, which
Speaker 1: belonged to Disney, and Disney was a stakeholder, that show
Speaker 1: was not available on Hulu back in twenty eleven. But
Speaker 1: why I mean? Like I said, ABC was part of
Speaker 1: the major stakeholders in Hulu, so what gives? Well, while
Speaker 1: ABC would broadcast The Middle, the studio that actually made
Speaker 1: the show was Warner Brothers. So ABC had secured the
Speaker 1: rights to broadcast the show, but Warner Brothers made the show.
Speaker 1: Warner Brothers declined to have The Middle available on Hulu.
Speaker 1: As to why, well, we can only speculate, but chances
Speaker 1: are it was an effort to protect the show so
Speaker 1: that it could make more money when it was put
Speaker 1: into syndication, because syndication is a very lucrative market for
Speaker 1: first run shows. So chances are Warner Brothers didn't want
Speaker 1: to cannibalize syndication fees, and so they chose not to
Speaker 1: have that show available on Hulu. It was and still
Speaker 1: is complicated, in large part because of how young the
Speaker 1: streaming business was. It was hard to know what would
Speaker 1: be important. Now, arguably, it wasn't hard to know what
Speaker 1: was important to the audience. The audience wanted access to
Speaker 1: their favorite shows. They wanted it to be in a
Speaker 1: reasonable way where they're not waiting a month to get
Speaker 1: the next or the latest episode. They wanted it to
Speaker 1: be cost efficient so they're not spending ridiculous amounts of
Speaker 1: money to do it, and preferably they'd like it to
Speaker 1: come along without an overabundance of ads. But for the
Speaker 1: cable companies, you know, the channels, the studios, the TV shows,
Speaker 1: Hulu itself, all the media companies that were part of this,
Speaker 1: things were less clear. So the negotiation process was a long,
Speaker 1: complex and often it was unique from case to case,
Speaker 1: so it was a huge hassle. Honestly, it's a miracle
Speaker 1: that Hulu was able to persist at all, particularly when
Speaker 1: you consider that ultimately the corporate owners are competitors with
Speaker 1: each other other. Stuff that was going on outside of
Speaker 1: Hulu would also have a major impact on the general
Speaker 1: landscape as well. Amazon's digital video offerings were picking up
Speaker 1: steam despite the company changing the service multiple times. So
Speaker 1: Amazon started with a service called Amazon Unbox where you
Speaker 1: could buy a digital copy of a movie and then
Speaker 1: you downloaded it. You weren't streaming it, you were downloading
Speaker 1: it to your computer to watch later. But this would
Speaker 1: eventually become Amazon Video on Demand. Then it became Amazon
Speaker 1: Instant Video, and then it became Amazon Prime Video, but
Speaker 1: from Amazon Video on Demand. Further, it was pretty much
Speaker 1: the streaming model, so the streaming options were really going on.
Speaker 1: By twenty eleven, Amazon Prime members would get access to
Speaker 1: Basic Prime Video service as part of their membership, and
Speaker 1: that boosted things considerably for that service. Also in twenty eleven,
Speaker 1: Voodoo announced that it was launching its own streaming service.
Speaker 1: We would also get Twitch in twenty eleven as a
Speaker 1: spinoff of Justin TV now. Twitch was and is more
Speaker 1: focused on user generated content, primarily centered around gaming, but
Speaker 1: not exclusively, so you are not supposed to rebroadcast stuff
Speaker 1: like television and films on Twitch. But Twitch is important
Speaker 1: because while it didn't directly compete with Hulu as far
Speaker 1: as content goes right, it's two different types of content.
Speaker 1: It does compete with Hulu when it comes time to
Speaker 1: talk about where are customers spending their time and money.
Speaker 1: If they're doing it on Twitch instead of Hulu, well
Speaker 1: then Twitch is still a competitor, even though you would
Speaker 1: argue they're not in exactly the same business. Cable channels
Speaker 1: and providers were also creating on demand viewing options for
Speaker 1: customers around this time. So, for example, in twenty ten,
Speaker 1: HBO introduced HBO Go. This would let HBO subscribers access
Speaker 1: on demand HBO programming through a website, app, or digital
Speaker 1: media player. Customers had to first authenticate that they were
Speaker 1: in fact a pay being subscriber to an HBO package
Speaker 1: in their cable television service, then they would be able
Speaker 1: to access this content online. Cable providers were doing similar stuff,
Speaker 1: allowing customers to authenticate their identity and then access a
Speaker 1: suite of content online. So the streaming industry was starting
Speaker 1: to coalesce, but it was taking different pathways depending upon
Speaker 1: who was behind the service. But now let's skip ahead
Speaker 1: a couple of years. So Hopkins had taken over as
Speaker 1: CEO at the end of twenty thirteen. The next really
Speaker 1: big development in Hulu's history, besides the fact that they
Speaker 1: would launch more original content, would come in the summer
Speaker 1: of twenty fifteen, and that's when Hulu announced that customers
Speaker 1: could pay to access a premium ad on channel. The
Speaker 1: first premium ad on channel Hulu would offer would be Showtime.
Speaker 1: Now this is interesting from a corporate standpoint because once
Speaker 1: again there's a lot of dramatic stuff happening behind the scenes.
Speaker 1: You know, forget shows like Dexter or Penny Dreadful that
Speaker 1: were on Showtime, The really juicy drama was happening in
Speaker 1: corporate boardrooms. So Showtime falls under the corporate umbrella of CBS.
Speaker 1: And if you recall, CBS was the one major broadcast
Speaker 1: network in the United States that was not a partner
Speaker 1: in Hulu because you had NBC, Fox, and ABC, which
Speaker 1: again was owned by Disney being the stakeholders of the company.
Speaker 1: CBS had tried to go its own way, first with
Speaker 1: TV dot Com and then in twenty fourteen, CBS launched
Speaker 1: CBS all Access. In twenty twenty one, CBS all Access
Speaker 1: would transform into Paramount Plus. Again, the streaming world is
Speaker 1: it's despite the fact that the streaming services world is
Speaker 1: fairly young, it's not even really more than like twenty
Speaker 1: years old. It's incredibly complicated and confusing, especially here in
Speaker 1: the United States. So for CBS to agree to license
Speaker 1: showtime content to Hulu as a premium add on was
Speaker 1: an interesting move. Customers who I wanted this add on
Speaker 1: would have to bump up their subscription fee and additional
Speaker 1: eight dollars ninety nine cents per month, which is interesting
Speaker 1: because that meant the add on costs more than the
Speaker 1: basic Hulu service of seven dollars ninety nine cents. However,
Speaker 1: it did cost less than it would cost customers if
Speaker 1: they got Showtime service through a device partner, because that
Speaker 1: fee was set at ten dollars ninety nine cents. Are
Speaker 1: you confused yet because I am. Anyway, this seemed to
Speaker 1: be an indication that the entrenched old media was becoming
Speaker 1: concerned about the future. You know, maybe putting up staunch
Speaker 1: resistance to streaming wouldn't work. Maybe it really was inevitable
Speaker 1: that streaming would at the very least take a big
Speaker 1: old chunk out of TV's numbers, and so media companies
Speaker 1: were starting to hedge their bets a little bit. In
Speaker 1: September twenty fifteen, Hulu would introduce a new option to subscribers,
Speaker 1: So for twelve dollars a month, you could get your
Speaker 1: content ad free. Arguably this was a necessary move because
Speaker 1: Netflix was running away with it in terms of success
Speaker 1: in the streaming space. So around this time when Hulu
Speaker 1: introduced this new subscription tier, they had around nine million
Speaker 1: subscribers in the United States, which isn't bad, but Netflix
Speaker 1: had forty one million at that point. So Hulu needed
Speaker 1: a way to gain more subscribers, and the company figured
Speaker 1: there were folks who were just bulking at the thought
Speaker 1: of having to pay a subscription and still have to
Speaker 1: watch ads anyway, So Hulu introduced the tier, so if
Speaker 1: you wanted to pay less, you could pay the seven
Speaker 1: ninety nine per month and watch material with ads. For
Speaker 1: the premium price of twelve dollars a month, you could
Speaker 1: get that same stuff but without the ads. And the
Speaker 1: hope was that the folks who really didn't want to
Speaker 1: deal with ads would now flock on over to Hulu.
Speaker 1: And you might be saying to yourself, but hang on,
Speaker 1: didn't Hulu also have a way to watch programming for
Speaker 1: free with no subscription at all. With ads, you know,
Speaker 1: you had fewer options. You couldn't watch full seasons, you
Speaker 1: could only watch a few episodes in the most recent
Speaker 1: airing of a show, but you still could do that
Speaker 1: right for free. Doesn't that undermine the subscription strategy? And yeah,
Speaker 1: it kind of did, which might be why in twenty
Speaker 1: sixteen Hulu ended the free tier of service. Hulu signed
Speaker 1: a deal with Yahoo, which would be allowed to do
Speaker 1: what essentially Hulu had already been doing, airing certain television
Speaker 1: programs with ads. That one was called Yahoo View, and
Speaker 1: it would only include the five most recent episodes of
Speaker 1: the various television shows, and those would only go live
Speaker 1: eight days after they had already aired on television on
Speaker 1: the three partner networks. At Hulu, it also had access
Speaker 1: to other network programming, but again the agreements of that
Speaker 1: were varied across the board. Meanwhile, over at Hulu, there
Speaker 1: was a new stakeholder that was joining the partnership. So,
Speaker 1: just to recap, at this point, the three main partners
Speaker 1: at Hulu were Comcast, which owned NBC, Universal Disney which
Speaker 1: owned ABC, and twenty first Century Fox. But joining them
Speaker 1: was Time Warner, which spent a hefty five hundred and
Speaker 1: eighty three million dollars for a ten percent steak in Hulu.
Speaker 1: This was in twenty sixteen. By the end of that year,
Speaker 1: Hulu would hit twelve million subscribers. Okay, this is a
Speaker 1: good point for us to take another break, but we'll
Speaker 1: be back after our message from our sponsors. Okay, we're back.
Speaker 1: I had just talked about in twenty sixteen how Hulu
Speaker 1: had hit twelve million subscribers, and that time Warner had
Speaker 1: purchased a ten percent steak in the company. Twenty seventeen
Speaker 1: was another huge year for Hulu for lots of different reasons.
Speaker 1: In May of that year, Hulu launched a beta test
Speaker 1: product called Hulu with Live TV Now. As the name suggests,
Speaker 1: this service included not just Hulu's library of on demand content,
Speaker 1: it also included access to live television programming. The service
Speaker 1: also launched with a DVR like feature. Customers who paid
Speaker 1: the thirty nine dollars and ninety nine cents per month
Speaker 1: subscription fee would get access to the live programming on
Speaker 1: demand programming, and they would have fifty hours of recording storage,
Speaker 1: so they could, you know, record shows as they were
Speaker 1: airing live and watch them later. The live programming included
Speaker 1: the four major broadcast networks, which also included local affiliates
Speaker 1: in some of the major markets, which is good because
Speaker 1: if you wanted to watch the news or something. You
Speaker 1: want it to be the news for your region, not
Speaker 1: the news for the closest major market. And a bunch
Speaker 1: of cable television channels were also included in this, not
Speaker 1: all of them, but a lot, and it made Hulu
Speaker 1: the first product to carry both live and on demand
Speaker 1: programming as an internet based service. And if you wanted
Speaker 1: to subscribe to the live service and also opt out
Speaker 1: of commercials for the on demand programming, well then you
Speaker 1: would have to add in that extra four dollars a
Speaker 1: month to your bill. So just like the basic service
Speaker 1: which was seven ninety nine or eight dollars a month,
Speaker 1: and the premium service was twelve dollars a month, same
Speaker 1: sort of thing, you still had to add that four
Speaker 1: dollars into your thirty nine and dollars of nine nine
Speaker 1: cents per month subscription if you didn't want ads on
Speaker 1: the on demand stuff. Now, I mentioned in the previous
Speaker 1: episode that Hulu got into the original content game earlier
Speaker 1: than Netflix by a couple of years. Netflix's House of
Speaker 1: Cards debuted in twenty thirteen. Hulu had been making original
Speaker 1: content since twenty eleven. Well, now we're up to twenty
Speaker 1: seventeen and Netflix had more than caught up by launching
Speaker 1: various prestige series. House of Cards led the way, but
Speaker 1: other shows like Stranger Things were also huge hits both
Speaker 1: critically and commercially. Hulu didn't just sit back, though. The
Speaker 1: company had produced multiple original films and shows as well,
Speaker 1: some of which were receiving critical acclaim, and one of them,
Speaker 1: the series adaptation of Margaret Atwood's dystopian novel The Handmaid's Tale,
Speaker 1: was a smash success. It was a huge hit with critics.
Speaker 1: It was very popular, so much so that it was
Speaker 1: The Handmaid's Tale that became the first series from a
Speaker 1: streaming network to win an Emmy Award. This was a
Speaker 1: really big moment for Hulu, and it indicated that original
Speaker 1: content made for streaming services could stand toe to toe
Speaker 1: with the stuff that was airing on broadcast and cable television.
Speaker 1: And it meant that Hulu could claim a first. In
Speaker 1: a year when Netflix had two series, it had House
Speaker 1: of Cards and Stranger Things in contention for that Emmy
Speaker 1: for Best Drama. Following Hulu's triumph was another big shift
Speaker 1: in leadership. Mike Hopkins, who had led the company since
Speaker 1: twenty thirteen, announced in October twenty seventeen that he would
Speaker 1: be stepping down from the company. Randy Freer, who like
Speaker 1: Mike Hopkins, was a C suite executive at Fox Networks Group,
Speaker 1: actually came over to become CEO of Hulu and he
Speaker 1: would stay in that role for just two and a
Speaker 1: half years. His departure in twenty twenty would be due
Speaker 1: to some other massive changes at the corporate level, which
Speaker 1: is what we would call foreshadowing. But I'm going to
Speaker 1: go straight to it, so I guess it doesn't really count,
Speaker 1: all right, So let's talk about some of these massive
Speaker 1: corporate moves that would happen around this timeframe of twenty
Speaker 1: seventeen to the early twenty twenties. So in twenty eighteen,
Speaker 1: while Hulu was celebrating its tenth anniversary as well as
Speaker 1: hitting twenty five million subscribers, AT and T acquired Time Warner.
Speaker 1: So this is when Time Warner would transform into Warner Media.
Speaker 1: Now you might remember that in twenty sixteen, Time Warner
Speaker 1: bought a ten percent steak in Hulu. Well, as part
Speaker 1: of this whole transfer with the AT and T acquisition,
Speaker 1: WarnerMedia would ultimately sell back its ten percent steak in Hulu.
Speaker 1: In twenty nineteen. This would leave the three stakeholders as Comcast,
Speaker 1: twenty first Century Fox, and Disney, or at least it
Speaker 1: would have, but in twenty nineteen, Disney acquired twenty first
Speaker 1: century Fox. This was not a shock, Disney had actually
Speaker 1: announced the intent to acquire twenty first century Fox back
Speaker 1: in twenty seventeen. The deal would mean that the movie Studio,
Speaker 1: twentieth Century Fox, plus several cable channels like FX and
Speaker 1: the Fox Networks Group would all transfer to Disney. Also
Speaker 1: transferring to Disney would be Fox's thirty percent stake in Hulu,
Speaker 1: so that would bring Disney's ownership to sixty percent. Then
Speaker 1: you have WarnerMedia selling off its ten percent share, Disney
Speaker 1: bumped up its ownership percentage to around sixty six percent,
Speaker 1: and Comcast would have essentially the other thirty four percent.
Speaker 1: Fun reminder, Jason Kylar, the original CEO of Hulu, would
Speaker 1: be heading up WarnerMedia around this time, and he would
Speaker 1: continue to do so until Discovery acquired WarnerMedia from AT
Speaker 1: and T. I told you these things are complicated. So
Speaker 1: the Mouse House thus gained a majority stake in Hulu,
Speaker 1: and this pretty much set into motion the events that
Speaker 1: would lead to Disney ultimately acquiring the whole shebang, but
Speaker 1: that would turn out to be a very, very long
Speaker 1: process that technically is still going on today because of
Speaker 1: disputes over the value of Hulu itself. Randy Freer stepped
Speaker 1: down as Hulu CEO in twenty twenty, and the new
Speaker 1: mandate was that whomever led Hulu would report directly to
Speaker 1: a Disney executive named Kevin Meyer, who was a direct
Speaker 1: to consumer executive over at Disney. Kelly Campbell, who had
Speaker 1: been chief marketing officer for Hulu, would become the new
Speaker 1: president of the company, and she reported directly to Kevin Meyer.
Speaker 1: More on her in just a second. Let's talk about
Speaker 1: the myriad of streaming platforms that also were launching around
Speaker 1: this timeframe. All right, So Netflix and Amazon had been
Speaker 1: going strong for more than a decade in the streaming space.
Speaker 1: At this point, CBS All Access was continuing, and then
Speaker 1: in twenty twenty one would transform into Paramount Plus. WarnerMedia
Speaker 1: would launch HBO Max, which in some ways was the
Speaker 1: successor to HBO Go. Disney had actually launched Disney Plus
Speaker 1: in twenty nineteen. That raised some eyebrows because it looked
Speaker 1: like Disney was competing against itself. I mean, it owned
Speaker 1: a stake in Hulu, and then it launches a competing
Speaker 1: streaming platform called Disney Plus. They also launched ESPN Plus,
Speaker 1: which obviously focused more on sports. Apple had launched Apple
Speaker 1: tv Plus in twenty nineteen, NBC Universal launched Peacock in
Speaker 1: twenty twenty, And those are just the big streaming platforms.
Speaker 1: There are a lot more that we could mention, and
Speaker 1: there are also dozens of free ads supported television services
Speaker 1: also known as fast services. That's like Crackle or two
Speaker 1: B or the Roku channel and more. What I find
Speaker 1: interesting is we went from Hulu, which started off as
Speaker 1: a joint venture between various media compares ed and we
Speaker 1: would end up with Hulu still being a thing, but
Speaker 1: the individual competitors had all launched their own independent services.
Speaker 1: And obviously this really just boils down to Peacock and
Speaker 1: Disney Plus, because Disney gobbled everybody else up. But yeah,
Speaker 1: by twenty twenty one, things were very different in the
Speaker 1: streaming space and there was a lot more competition for
Speaker 1: viewer time and dollars. Andy'll that's tough. Like a lot
Speaker 1: of these these services require subscription. They're not free to use,
Speaker 1: so they are in direct competition with each other, and
Speaker 1: customers were getting frustrated because the original belief was that, hey,
Speaker 1: streaming's going to let me access the things I want
Speaker 1: pretty easily. But in truth, if you want to access
Speaker 1: all the stuff you potentially like, it means you're subscribing
Speaker 1: to like half a dozen or more services. Heck, I
Speaker 1: subscribe to around that many, and there's some I still
Speaker 1: don't subscribe to, which means like, there are shows I've
Speaker 1: heard about that I know I would love that I
Speaker 1: have never seen because I don't have an account with
Speaker 1: that service. All right, So more drama was happening at
Speaker 1: the leadership level over at Hulu. I mentioned Kelly Campbell
Speaker 1: became president of Hulu in twenty twenty, while in twenty
Speaker 1: twenty one she resigned, and two days after she resigned,
Speaker 1: she took the job as president of Peacock, the streaming
Speaker 1: service from NBC Universal, which of course is owned by Comcast.
Speaker 1: And that seemed like shots fired right, Like, she steps
Speaker 1: down from Hulu, a joint project between Disney and Comcast,
Speaker 1: and then becomes head of Peacock, which is owned by Comcast.
Speaker 1: You know, it's it's very odd Well, Joe Early would
Speaker 1: replace Kelly Campbell as president of Hulu. Last year he
Speaker 1: actually got promoted. He's now President of Direct Consumer Disney Entertainment,
Speaker 1: which puts him in charge of all Disney streaming efforts,
Speaker 1: so not just Hulu but also Disney Plus. So I
Speaker 1: think we're currently done with the various corporate shuffling at
Speaker 1: this point for this part of the story. Anyway, who
Speaker 1: knows what tomorrow will bring. There were rumors in late
Speaker 1: twenty twenty three that Hulu might make another go at
Speaker 1: an initial public offering. In the last episode, I mentioned
Speaker 1: that there was early talk of a Hulu IPO back
Speaker 1: in twenty eleven, but that just never came to be. Well,
Speaker 1: neither would the twenty twenty three IPO, because in twenty
Speaker 1: twenty three, Disney announced it would acquire Comcast's share of Hulu,
Speaker 1: which was around thirty three thirty four percent, and that
Speaker 1: the deal was valued at a minimum of eight point
Speaker 1: six billion with the B dollars, that's a princely sum. Now.
Speaker 1: This would also bring an end to the joint venture
Speaker 1: status of Hulu once and for all. Once this deal closes,
Speaker 1: Disney had pretty much full control of the company. Anyway
Speaker 1: since twenty nineteen because it had acquired twenty first Century
Speaker 1: Fox and gained majority ownership of Hulu. Comcast had largely
Speaker 1: been a silent partner at that point, but then Comcast
Speaker 1: also launched the Peacocks service in competition with Hulu. So
Speaker 1: Disney has been offering various bundles that include Hulu and
Speaker 1: Disney Plus since two thou nineteen, and has more directly
Speaker 1: integrated Hulu into Disney Plus bundles since the company's announcement
Speaker 1: that it was going to acquire full ownership of Hulu.
Speaker 1: Some have said that Disney's plans to treat Hulu as
Speaker 1: its way to deliver the non disney Ish stuff in
Speaker 1: its portfolio is the real heart of the strategy. That
Speaker 1: Disney Plus will be kept to the more family friendly,
Speaker 1: traditional Disney content of the Walt Disney Company, and Hulu
Speaker 1: will be like everything else, essentially now for one last
Speaker 1: bit of drama. So Comcast has accused Disney of trying
Speaker 1: to sandbag Hulu leading up to the transfer of ownership,
Speaker 1: So essentially what Comcast is saying is that Disney has
Speaker 1: purposefully chosen to favor other deals in favor of Hulu
Speaker 1: rather than actually growing Hulu, because if they were to
Speaker 1: grow Hulu, Hulu's value would increase, and then Disney would
Speaker 1: have to pay more money to Comcast for that thirty
Speaker 1: three percent. And I guess you can kind of see
Speaker 1: Disney you here if that's in fact true, that you know,
Speaker 1: you don't want to invest in making a company more
Speaker 1: expensive just because you're going to have to pay that
Speaker 1: money ultimately to acquire the very last bit of it.
Speaker 1: So why not just let Hulu kind of idle and
Speaker 1: keep on keeping on until the deal closes, at which
Speaker 1: point then you can pursue efforts to expand the service.
Speaker 1: But yeah, still it kind of seems like dirty pool.
Speaker 1: And to the surprise of no one, Disney and Comcast
Speaker 1: fundamentally disagree as to how much Hulu is actually worth.
Speaker 1: Obviously this matters because Disney has agreed to purchase Comcast's
Speaker 1: thirty three or thirty four percent stake in the company,
Speaker 1: And in fact, Disney has already paid the eight point
Speaker 1: six billion dollar minimum to Comcast late last year. But
Speaker 1: that was just to cover the minimum, right, we know
Speaker 1: that it was going to be more than eight point
Speaker 1: six billion. That was just the bottom price. So it's
Speaker 1: kind of like a down payment. So Comcast and Disney
Speaker 1: each hired firms to evaluate Hulu's worth to determine how
Speaker 1: much the final cost of that thirty three percent is
Speaker 1: going to be, and as I'm sure you can guess,
Speaker 1: the two sides came up with very different answers. Now,
Speaker 1: their agreement stated that if their individual evaluations were within
Speaker 1: ten percent of one another, the final payout would become
Speaker 1: the average between these two values. But that didn't happen
Speaker 1: because the two values are not in ten percent of
Speaker 1: each other. According to Reuter's. Disney hired JP Morgan to
Speaker 1: estimate Hulu's value, and that amount came to twenty seven
Speaker 1: point five billion dollars or so. Comcast meanwhile secured the
Speaker 1: services of Morgan Stanley, which said that Hulu is worth
Speaker 1: more than forty billion dollars. That's a huge gap, twenty
Speaker 1: seven point five to forty and it means that the
Speaker 1: two companies have to hire an independent third party to
Speaker 1: evaluate Hulu again and to determine its quote unquote real value.
Speaker 1: I put the reel end quotes because y'all, this all
Speaker 1: ends up being at least somewhat subjective, and obviously, like
Speaker 1: Disney had an incentive to have a lower valuation so
Speaker 1: it wouldn't have to pay as much. Comcasts had an
Speaker 1: incentive to have a higher valuation so it could get
Speaker 1: paid more. Now, the way this is going to work
Speaker 1: is that the third party is going to produce its
Speaker 1: own valuation. If that valuation is closer to Disney's number
Speaker 1: than those two valuations get averaged together. That determines how
Speaker 1: much more money Disney has to pay to Comcast. If
Speaker 1: the valuation is closer to Comcast's number than those two
Speaker 1: figures will get averaged, and then Disney will have to
Speaker 1: cough up the difference, whatever the final damage will be.
Speaker 1: Disney will then become the sole owner of Hulu. Now,
Speaker 1: this is not the end of Hulu's story, but it
Speaker 1: will be the end of it being a joint venture
Speaker 1: between media competitors. So will Hulu flourish under Disney or
Speaker 1: will we see its offerings diluted due to competition from
Speaker 1: other streaming platforms and companies wanting to keep their stuff
Speaker 1: exclusive for their own platform that they have launched, Or
Speaker 1: are we going to see a sort of return to
Speaker 1: the old days, only in the form of bundle that
Speaker 1: make online streaming look more and more like cable television,
Speaker 1: where you're going to be paying for a access to
Speaker 1: a bundle of different services for one monthly fee. I'm
Speaker 1: betting that last one is going to be the case,
Speaker 1: at least for a little while. But ultimately, I think
Speaker 1: audiences are going to decide the fate of these services,
Speaker 1: each of which has focused more on creating original content
Speaker 1: and migrated further away from being a rebroadcast service. That's
Speaker 1: another kind of ongoing through line for all of these
Speaker 1: different platforms is that the access to the vast library
Speaker 1: of material that has come out before is part of
Speaker 1: the strategy, but the thing that attracts new subscribers tends
Speaker 1: to be original material that you can't find anywhere else.
Speaker 1: So it was interesting to watch that happen first with
Speaker 1: Hulu and then with Netflix and Amazon as well, and
Speaker 1: now with all these different platforms you can find original
Speaker 1: programming on all of them to some degree or another,
Speaker 1: that that has become the new approach. Anyway, that is
Speaker 1: the Hulu story as it stands now. Obviously it's still developing.
Speaker 1: We're gonna eventually get to a point where Disney does
Speaker 1: have to pay whatever extra amount is owed to Comcast
Speaker 1: and then we've got, you know, Hulu, a Disney company,
Speaker 1: and you'll be able to that. You already are able
Speaker 1: to subscribe to a bundle of Hulu and Disney Plus.
Speaker 1: You are if you're not me. I made a goof
Speaker 1: What I did was when I subscribed to Disney Plus,
Speaker 1: I chose to go ahead and subscribe for a full year,
Speaker 1: which means I can't make a change to my subscription
Speaker 1: status until next November. So while I could technically subscribe
Speaker 1: to Hulu, I don't want to yet because I'm planning
Speaker 1: on changing my subscription to Disney Plus and November to
Speaker 1: get the bundle so that I have access to all
Speaker 1: that material. But it means in the meantime, I don't
Speaker 1: have access to it, because otherwise I'm going to have
Speaker 1: to manage even more subscriptions, and y'all, I just I
Speaker 1: don't have the brain cells for I'm sure you are
Speaker 1: aware of that already, just from listening to this podcast.
Speaker 1: One other thing, we will have a new episode on Friday,
Speaker 1: but then next week we've got Memorial Day here in
Speaker 1: the United States, so I'm going to have some reruns
Speaker 1: on Monday and Wednesday, as I will be out of
Speaker 1: town and then plan to have another new episode on
Speaker 1: next Friday as well. Just wanted to make y'all aware
Speaker 1: of that before it happens, and I hope you are
Speaker 1: all well. I hope those of you who will be
Speaker 1: celebrating a long weekend do so joyfully and safely, and
Speaker 1: I will talk to you again really soon. Tech Stuff
Speaker 1: is an iHeartRadio production. For more podcasts from iHeartRadio, visit
Speaker 1: the iHeartRadio app, Apple Podcasts, or wherever you listen to
Speaker 1: your favorite shows.