Hulu's one big advantage over Netflix has historically been its roster of current-season TV episodes from hit shows, but that will evaporate if Time Warner gets its way.
Time Warner is deep in talks to buy a 25% stake in Hulu, but the company ultimately wants episodes of current TV seasons to be kicked off Hulu, according to The Wall Street Journal. This isn't a condition for investment, but it puts Time Warner fundamentally at odds with something that has been an integral part of Hulu's business model and has helped the service snag 10 million subscribers (for reference, Netflix has about 45 million US subscribers).
Why does Time Warner want to cripple Hulu's big advantage?
The company sees "next-day" TV content as something that undermines the value of its pay-TV packages, The Journal reports. Time Warner fears that Hulu's popularity, especially built on the back of current TV seasons, will accelerate cord-cutting, or the ditching of cable subscriptions altogether.
At its core, the argument comes down to whether you believe the big bundle, the 500-channel cable package, can be saved. Time Warner clearly does, and it wants to bulk up its own TV Everywhere packages, which are tied to a cable subscription. From this vantage point, it's easy to see why Time Warner sees Hulu as undercutting its business.
But if you believe the big bundle is ultimately doomed, Hulu seems like the logical place for companies like Time Warner to experiment with the idea of a slimmer bundle, beginning to build the next generation of media distribution.
If Time Warner strips Hulu of next-day shows, Hulu will be forced into more direct competition with Netflix. That probably means staking a huge part of its future on original content, as licensing old seasons of shows is a tough way to build an enduring brand. Hulu scored its first Golden Globe nomination this year for its comedy "Casual," but it still has a ways to go in producing shows on par with Netflix.
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