Hulu Stepping Up Against Battle with Netflix

Earlier this year, 21st Century Fox encountered trouble with Netflix when it started shopping for rights for its TV drama called ‘Empire’. According to Netflix, the show had been devalued by Fox by offering the complete first season available through cable video-on-demand services rather than just offering a handful of episodes. If the practice, which is called ‘stacking’ episodes was to be continued by the TV network, Netflix wanted a discount. Hulu, a rival streaming service stepped in and stated that not only was the stacking episode practice acceptable, but it offered to pay more than what Netflix was offering. Fox said that the stacking practice had helped in building the show’s audience by letting viewers catch up.

The Empire deal is just one example how the wishes of traditional television giants are being fulfilled by Hulu and it has also secured deals with some major content-producers in recent months, which include prominent names such as Time Warner Inc.’s Turner Broadcasting, AMC Networks Inc., 21st Century Fox FX’s Networks and Discovery Communications Inc. Due to these deals, ‘Aqua Teen Hunger Force’ of Turner and ‘Deadliest Catch’ of Discovery are moving from Netflix to Hulu. Hulu’s attitude doesn’t come off as surprising in regard to the TV industry.

This is primarily because Hulu was formed by a joint venture of Walt Disney Co, Comcast’s NBC Universal and 21st Century Fox. Seven years ago, it was launched as a free, ad-supported home for broadcasting TV shows that could fight against the threat of online piracy. The relationship of Hulu and its parents runs hot and cold from time to time and it has ended up on the auction block twice. However, in the past few years, the service has moved towards building a subscription service of $7.99 a month with the aid of cash infusion from its owners worth $750 million in order to help it in taking on the Netflix juggernaut.

This cash infusion came after the latest sales attempt of the company in 2013. Since then, Hulu has adopted an aggressive strategy in the content market with deals for big franchises and original shows such as paying $700,000 per episode for obtaining streaming rights of ‘Seinfeld’. During this process, Hulu has become a relevant and important piece in the complicated chess board between media companies and Netflix. The former have become nervous about the impact of Netflix on their business with its 40 million subscribers as ratings decline.

Apart from its acceptance of stacking episodes, Hulu is also ready to promote seasons of TV shows for inciting more users to watch and will even brand them with the original TV network like AMC or FX. Mike Hopkins, the chief executive of Hulu said that branding would be helpful for them as loyal customers are bound to tune in that way. Netflix’s view is different. It believes that programmers like AMC moved to Hulu because Netflix doesn’t pay top dollar for stacked shows and cherry picks the best performers while focusing on original programming.