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Hulu Shies Away from Public Market

Posted on Friday, Jun 29th 2012

Online video service Hulu has put aside all IPO plans. It is instead concentrating on growing its presence in the market. As of May 2012, Hulu reported close to 38 million viewers, of which more than two million were subscribers of the paid service, Hulu Plus.  Also in May, Hulu reported 25.6 million viewers averaging more than four hours of viewership every day. The company has not disclosed its financials, but at the most recent reported results, Hulu saw revenues grow more than 60% over the year to $420 million for the past fiscal year.

Hulu Expands Into Content
According to comScore, within online video views, Google’s YouTube commands leadership, with more than 17.6 billion views in May 2012. Compared to those numbers, Hulu is rather small, with 888 million views, followed closely by Yahoo’s 846 million views. But Hulu is determined to narrow that gap.

Of late, Hulu’s focus has been on developing its own content. Recently, it released its first self-created program, “Battleground.” It also announced the release of an offbeat travel show, “Up to Speed,” by director Richard Linklater. The show follows historian Timothy “Speed” Levitch through tours of forgotten monuments and debuts this summer. Last quarter, it released the second season of Morgan Spurlock’s “A Day in the Life” which will have a 10-episode run to show a day in the life of celebrities like Community‘s Joel McHale, comedian Marc Maron, and UFC fighter Jason “Mayhem” Miller. Another show scheduled for this year is a scripted comedy, “We Got Next.”

Analysts agree that while the quality of this originally produced content may not be similar to the more popular TV shows aired by the bigger production houses, these shows are improving. The new programming will also help Hulu attract users to access its other big library. Together, between content development and acquisition, Hulu plans to spend more than $500 million this year.

Hulu’s Advertising Improvement
Hulu is also working to improve its standing with the advertisers by charging them only for advertisements that were viewed in their entirety. Hulu claims that 96% of its ads streamed online are viewed through the end of the advertisement, and it does not charge advertisers for the 4% ads that were stopped mid-way. In February 2012, Hulu showed more than 1.5 billion video ads, compared with Google’s 1.2 billion. However, in terms of time spent on viewing these ads, Hulu reported 650 million minutes compared with Google’s 119 million minutes. Surely these statistics will help Hulu to earn more advertising revenues.

Hulu’s Mobile Expansion
In addition, Hulu is growing its mobile platform presence. Hulu’s CEO, Jason Kilar, rightly believes that the “television can be in your pocket with a smartphone. It can be up on a wall. It can be in a little tablet.” He is ensuring that Hulu’s services are available in all these media. Recently, Hulu Plus updated its Android app for more devices. Users of Galaxy S II and HTC One will now be able to view content from Hulu Plus on their devices. The new app has also been upgraded to support a seven-inch viewing screen and comes with better resolution to improve the viewing experience on a smartphone.

The Internet Protocol television (IPTV) market is going through a massive change, and Hulu remains at the forefront of many experiments. The company, while increasing revenues nicely, has not yet figured out its profitability equation, which is probably why it is shying away from the public market. That’s a wise choice.

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