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NBC and Fox News Corp, two television network rivals, have partnered to create Hulu, an Internet video site that allows anyone with Internet access to play, for free, television shows and movies from 120 sources, ranging from old classics to a current episode of Gossip Girl for free.

YouTube is currently the most popular online video site, boasting 5.2 billion video streams in a recent month, but this niche is challenging because much of the content is user-generated—including low-quality home video clips that play poorly in a miniaturized window. Hulu is now the second-most accessed Internet video site, with a 32 percent increase in video streams from the previous month and 309 million streams in a month. The site already has surpassed Yahoo, Nickelodeon Kids and Family Network, and Fox Interactive Media.

Hulu operates as a separate company from its parents—NBC and Fox—and does not credit them on its site. Customers are loyal to brands associated with shows, not the networks on which they air. The site delivers video content that consumers want, and it can do so for free by sharing advertising revenue with the networks.

Hulu shows play using high resolution video in the browser, so they do not require a downloadable player that shrinks in size to just a fraction of the computer screen. Commercials, which viewers consider a necessary evil, are shortened on the Hulu site from 8 to 2 minutes per 30 minutes of Internet video. The site is clean, unlike YouTube or other sites that suffer a “Tokyo at night” effect, wherein bright flashes of color accompany advertisements to vie for customers’ attention.

The company recently integrated social networking into its model to increase awareness and usage. Hulu users can create profiles and make “friends,” just as they can on Facebook. This feature allows users to share videos easily and track activity on the site. The tracking also will help Hulu better reach its customers through targeted advertising.

However, critics are concerned that customers will ditch their cable service, preferring the convenience of watching whenever they want from their computer. But Hulu is concerned with creating new entertainment or replacing the television, so its move into social networking may help reinforce its positioning and expand the site.

Discussion Questions:

  1. What is Hulu?
  2. Why is Hulu involved in social networking?

Elizabeth Holmes, “Hulu Embraces Social Networking,” The Wall Street Journal, March 12, 2009; Chuck Salter, “#3 Hulu,” The Fast Company, February 11, 2009.