DirecTV, Yahoo, and a third unnamed bidder have upped the ante in the quest to acquire Hulu, the American TV and movie streaming service that launched domestically in 2008 and in Japan in 2011, with each offering more than a billion dollars. Hulu is jointly owned by News Corp, Disney, and Comcast, who rejected previous bids in 2011 after being unhappy with the amount of money offered.
While the third bidder has not been named, several other high profile entities have reportedly joined the bidding war, including Time Warner Inc., Guggenheim Digital, Silver Lake Management, private equity firm KKR, talent agency William Morris Entertainment, and former News Corp president Peter Chernin.
Yahoo’s inclusion may have come as a surprise to some, with the third ranked search giant having recently acquired micro-blogging site Tumblr for $1.1 billion – hedging a lot of cash on the hope of targeting a younger market with Yahoo ads. Hulu, on the other hand, is a proven money-maker.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
The larger three Hulu owners bought out Providence Equity Partners Inc.’s 10 percent stake last year for $200 million, which saw the service valued at $2 billion. With more than 4 million paid subscribers, coupled with ad revenue, Hulu has revenue of about $700 million annually.
Hulu Plus, the company’s premium service, launched in 2010. It costs $7.99 per month for subscribers in the U.S. and gives users an expanded streaming library, the opportunity to watch programming in high definition, and compatibility with multiple devices such as iPhones, iPads, and smart TVs. Hulu Plus is included with popular digital media receivers, such as AppleTV and Roku, and can also be accessed through Nintendo’s Wii, Wii U, and 3DS; Sony’s Playstation 3; and Microsoft’s Xbox 360.
In Japan, Hulu costs 980 yen per month and offers a skimpier library than the U.S. original. However, Hulu’s Japanese service also offers Asian programming and is ad-free. Hulu has yet to enter markets outside the U.S. and Japan.
As internet TV becomes the norm for viewers, Hulu faces huge competition from Netflix and Amazon. Netflix already boasts more than 29 million subscribers (compared to Hulu’s 4 million, and even overshadowing premium TV provider HBO’s 28.7 million). Netflix also produces exclusive content, such as its hit show House of Cards, and has exclusive rights to the reboot of the cult comedy series Arrested Development. Amazon offers its Prime service at $79 per year, which is cheaper than Hulu and offers free shipping on domestic Amazon orders.
Could Hulu become “YaHulu”? Will one of the seasoned TV veterans make an offer that Hulu can’t refuse? Or will News Corp, Disney, and Comcast hold out for a bigger payday? Regardless of the outcome of Hulu’s most recent bidding war, one thing is for certain – internet TV is lucrative business.