Disney Scores Sweetheart Hulu Deal

[The Canadian]

Disney announced earlier today that it intends to acquire an approximate 30 percent stake in Hulu, the online video site launched by NBC/Universal and Fox network owner News Corp, a move that will let Hulu users watch full-length ABC TV shows for free.

The move, though not unexpected, marks a victory for Disney and its ABC television programming: Not only does the deal erase NBC?s and Fox?s early-mover advantage over ABC, but Disney?s Hulu deal appears a bit sweeter than those of the other networks because it requires them to make only certain episodes from a series available on Hulu at any given time. The first taste may be at Hulu, but the full meal will still be on Disney-controlled real estate.

?It?s a far better deal than than expected for ABC than it is for NBC and Fox,? Screen Digest senior analyst Arash Amel told wired.com. ?You might get a couple of episodes on Hulu, but the entire back catalog is in the ABC full episode player, and then Hulu just redirects you back to ABC,? added Amel. ?Disney likes to hold onto control where it can.?

Soon-to-be aDesperate Housewives, General Hospital, Grey?s Anatomy, Lost, Scrubs, Ugly Betty, and Who Wants To Be A Millionaireo Be A Millionaire.

The deal puts Disney content on a wildly popular destination site where it will capture new eyeballs those who expect to have content to come to them ? not to have to chase it down at multiple sites.

?Disney is acknowledging that [Hulu] is clearly more than just a couple of networks throwing some of their content online,? Gartner research vice president Mike McGuire told wired.com. ?This is a fairly serious platform they need to be part of.?

DespiteWall Street Journaln the Wall Street Journal and elsewhere, it?s unclear whether Disney actually paid anything under the deal. Disney didn?t immediately return our call asking whether any money changed hands.

Amel says that NBC/Universal and News Corp. may not have paid a cent for their share of Hulu either. Instead, the networks provide the content, while Providence Equity Partners ? the only part-owner of Hulu that doesn?t own television content ? ponied up the $100 million that funds the service?s development and operations.

Hulu represents a serious bright spot for television networks. Not only does it leapfrog the piracy problem by offering faster, more convenient access to their videos than bit torrent can provide, but advertising on the site cannot be fast-forwarded, unlike the television ads we so happily skip past while watching on our DVRs.

This sweetheart Hulu deal represents the third prong in Disney?s approach to online content. The company also has deals to offer ESPN 360 and other programming only to subscribers of certain ISPs (note that ESPN was not part of this Hulu announcement), and last month inked an agreement with YouTube to share revenue from short-format videos and sports clips. This Hulu investment rounds out the equation by giving the company a stake in ad-supported, full-length online content that people can access regardless of who their ISP is.

For now, Disney and the other networks are managing to balance the strategic necessity of putting their content online with their relationships with the cable television industry, but that will likely end soon.

At a certain inevitable point, which may be accelerated by a floundering economy, mainstream viewers are going to start wondering why they pay for cable at all, when HDTV signals are available as free, over-the-air broadcasts and there?s so much new, premium content on Hulu available without the hassle of waiting for bit torrent files to download.

?There has never before existed an open pipe that could deliver exactly the same [television] content, for free, from the content owners,? said Amel. ?It?s the principle of dis-intermediation. And the irony is, the cable operators are marketing it themselves.?

The tipping point, according to Amel, will occur when Hulu starts showing up on televisions through set-top boxes. The company has made it clear that it has no plans to integrate its service with televisions, but eventually, the lure of bypassing cable operators and going straight to the consumer could prove too strong.

In contrast to its complicated implications for television studios and cable television operators, this deal is dead simple from a consumer perspective. It just means you can watch more shows on Hulu.

Disney will soon begin streaming the fDesperate Housewives, General Hospital, Greek, Grey?s Anatomy, Hope and Faith, Jimmy Kimmel Live, Less Than Perfect, Lost, Phineas and Ferb, Private Practice, Scrubs, The Secret Life of the American Teenager, Ugly Betty, The View, Wizards of Waverly Place, and Who Wants To Be A Millionaireards of Waverly Place, and Who Wants To Be A Millionaire.

Source: Wired News