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Strategy report
TO: Proximity Video Team FROM: Cory Chapman DATE: October 1, 2009 SUBJECT: Hulu Strategy Analysis

Here is my strategy report on Hulu. Although, Hulu is best known for streaming free TV shows and movies, it is now considering offering both a special subscription and a Pay-per-view service (Cimpanu, 2009). Whether Gen Y adapts to these new programs will depend on if Hulu provides them with aspects that will get them from a free service to their new paid subscription program.


 * __Profile__**

Hulu is as a joint venture supported by Fox Entertainment Group, NBC Universal, and ABC Inc. Yahoo, Facebook, MSN, and AOL were the initial distribution partners, with Jason Kilar as CE0. Hulu started private invitation-only beta testing in March 2007, which allowed users to invite friends. Hulu officially launched its public service on March 12, 2008 (Wikipedia, 2009).

Hulu streams free TV shows and movies to users in the United States from more then 100 content providers. Its revenue comes from two sources:

· //Advertisements// who display ads on their website/videos (Hulu, 2009); · //Partnerships// with other websites like Yahoo, Facebook, MySpace, and many others (Hulu, 2009).

As of March 2009, Hulu is currently the third largest online video service in the U.S. This marked the first time they ever cracked the top three. It came in with 437,098 videos viewed that month; putting them only behind Google sites and Fox Interactive Media (comScore). In 2008, they generated sales of 2.1 million dollars (Hoover’s Inc., 2009). The sales generated for 2009 have not came out yet, but from the growing popularity of the site, I can only imagine that will in turn produce more sales for them this year.


 * Competitive Landscape**

The main force driving competition on the Internet TV landscape is supplier power. Ventures such as Hulu do not generate their own content and must therefore compete with others services for their product. The content that viewers want comes from suppliers who are tied to large companies and studios in New York and Los Angeles. For an organization to be successful in this market, they need to form many different partnerships.


 * Hulu’s Strategy**

Hulu has developed already developed a strategy and are working on another so that they are in control of their supplier power. First they have already partnered up with most of the big media outlets that produce TV shows. They have partnered with major programs like Fox, NBC, ABC, Comedy Central, USA Network, FX, Bravo, and many more. By joining with these major programs, they can insure that they will be the only ones supplying that content for customers to see. However, Hulu realized they may need another way to make sure they aren’t controlled by supplier power so they are planning to add a subscription program. This new subscription program will increase their income and won’t make them completely rely on content to overcome the supplier power.


 * Gen Y Implications**

The Gen Y public expects most services on the web to be free. So by trying a new product that costs money will be risky with the Gen Y. I don’t know how this new subscription program will do with the Gen Y because it has been full revealed yet. But for them to attract the Gen Y public, they will need to offer them something new and different that will make them won’t to spend money for it. Price is one of the most important deciding factors when choosing a service, which is shown in how Hulu’s free videos have done so well. So Hulu will have to develop some aspect of their new program that will get the Gen Y public to actually spend money when most services on the internet are free. **__References__** · __Wikipedia: The Free Encyclopedia.__ 21 September 2009. 22 September 22 2009 <[]> · Cimpanu, Catalin. “Hulu Execs Confirms New Paid Services.” __Zikkir.__ 20 September 2009. 22 September 2009. <[]> · __Hulu.__ 2009. Hulu LLC. 22 September 2009.  · Hoover’s Inc. Hulu, LLC: Company Overview. Retrieved September 30, 2009.  · comScore. (2009.) Hulu Continues Ascent in U.S. Online Video Market, Breaking Into Top 3 Properties by Videos Viewed for First Time in March. Retrieved September 30, 2009, from  __

Blog proposal
TO: Proximity Video Team FROM: Cory Chapman SUBJECT: Blog Post Proposal DATE: October 27, 2009

I propose that we do our Proximity blog post on the testing on Hulu’s new subscription program for online video. This post will be able to show us whether the Gen Y would be interested in this new service and could attract a new group of customers that didn’t know about Hulu to start with.


 * Rationale**

Hulu has long been known as online video service that provides its content for free. However, after recent years of receiving losses even despite high revenues, Hulu has decided to put forth a subscription-based Hulu. They haven’t decided to include the subscription program with the free current advertising based Hulu or just a subscription based Hulu. So far they are going forth with the plan of a subscription based program, running beta testing right now. Not all the details have been worked out or has there been a time table set for it, but as of now, it looks like it is on its way whether people want it or not.


 * Sources**

We should use the blog [|Hulu Beta Testing Subscription Based Online Video Service | It Seems Murdoch Gets His Way] by Dave Parrack to base our post around. From there we can use other blogs and conduct our own testing to see whether subscription programs are the right way to go for Hulu.

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Report proposal
TO: Proximity Video Team FROM: Cory Chapman DATE: Nov. 24, 2009 SUBJECT: Proposal for report on Hulu

Hulu has primarily been known an internet service that offers TV shows and movies for free. However, now it is branching off by developing a new subscription based program that will either go with the already free content or will include it in the paid program. I propose to write a report on how Hulu is changing from just free content to adding a subscription program.


 * Need**

Hulu needs to offer better services to compete and the only way is with a paid subscription program.


 * Hulu is losing profit with just the free content and need to find a new way to make more money.

changing the way they view movies and TV shows from renting and buying DVD’s to streaming videos on the internet.
 * People are
 * There are many other sites offering new and better services that Hulu needs to compete with like YouTube, iTunes, Netflix, and many others.


 * Will the public like that Hulu has a new service you need to pay for when it was made and became huge as a service that offers free content.

However, the competition is continuing to grow with different internet services and Hulu is not making enough of a profit to continue offering free content. There plan of receiving profit just from advertisements is not as successful as they hoped. So they need to offer a new paid for subscription that will offer new and better services and give Hulu another source of profit. They hope this will allow them to compete with other services like YouTube, Netflix, iTunes, and others.

Clients of Proximity who wish to target the Gen-Y public needs this report so they can understand the rising popularity of streaming video online through Hulu.


 * Topics**

The proposed report, "Hulu's New Subscription Service Strategy" will cover the following topics:

· Growth of streaming video with embedded ads

· Hulu’s revenue problem

Alternative systems - i.e. cable over broadband, download and own (the iTunes model), streaming via a game box,

· Reactions to the subscription model

The report will also include additional information and attachments about Hulu’s subscription plan and compare it to other alternatives systems.


 * Sources**

The following items are key sources I will use for this report.

Parrack, Dave. Hulu Beta Testing Subscription Based Online Video Service | Rupert Murdoch Destroying Free TV (2009, September 19). Web TV Wire. Retrieved on November 23, 2009.

Parrack reports on the Hulu beta testing for the new subscription program. He notes that Hulu’s subscription program is no longer an idea but it’s already on the way. Internal beta testing has already happened and details on the program are being worked out. Parrack states that “ This is not imminent, with next year being mooted, but it looks like it’s definitely on the way, whether anyone wants it or not.” No one knows whether or not this will be a good move because details have not emerged yet from the company, but Parrack includes is his personal opinion that it would only work if it co exists with free content and the subscription part includes specials like HBO or Showtime.

Sandoval, Greg. More signs Hulu subscription service is coming (2009, October 22). Cnet News. Retrieved on November 23, 2009.

Sandoval informs that Hulu will charge for at lease some of its films and TV shows. He quotes an interview with Chase Carey, chairman of News Corp, in which he talks about Hulu and how it’s evident that a subscription program is coming. In the interview, Carey states that “there is no timetable set, but believes the program will likely be made in 2010.” However, Sandoval is not sure that charging for content online will solve Hulu’s revenue problems. There are still many sites that offer pirated videos for free and that could hinder Hulu’s success.

Herrman, John. Hulu’s Free Glory Days Are Officially Numbered (2009, October 22). Gizmodo. Retrieved on November 23, 2009.

John works off the same Chase Carey interview that Sandoval blogged about, but he goes a little deeper to get different information. He uses the same quotes Sandoval did like how Carey said that “its time to start getting paid for broadcast content online.” However, John includes a quote from Betina Chan Martin from Hulu that contradicts Carey’s statements. She still believes that “ad-supported, free service would serve complement their existing offer”.

Bennett, Richard. How video is changing the internet (2009, November 22). Gigaom. Retrieved on November 23, 2009.

Bennett focuses more on the streaming video in a whole. He states that streaming video is changing the internet. Traffic on the internet is growing each year because of agreements between large content providers. Streaming video is one of the major reasons for “paid peering” agreements between large content providers. More legal internet sites are rising and less illegal piracy websites are falling, which is making more traffic on the internet flow through streaming video based websites. He quotes in the article that “Thanks to YouTube, Google alone is responsible for 7 percent of all the traffic on today’s Internet.”

Mermigas, Diane. TV Station Revenue Crisis: Mind the Gap (2009, July 6). Media Post Blogs. Retrieved on November 23, 2009.

Diane brings up one the critical decisions in social media about whether to give content for free or make people pay for it. This focuses on the main issue at hand in social media, and Hulu, about whether or not it is better to offer free content or paid for content. She uses two different blogs about free content and paid for content. In the paid for content blog, she focuses on Apple and Amazon and how there forgoing paid access models and why it’s better to monetize, or go with paid for content. She states in that blog that: “ Apple and Amazon are forging paid access models with applications and digital content that could generate enough revenue and market share to give Google ulcers.” In the other blog, she focuses on the free content side of social media content. She uses TV stations to show how free content that is based on advertising is struggling and might not be the way to go. She states in her article that: “When the economic hemorrhaging stops, broadcast TV stations will still be struggling to close the $3 billion-plus gap between their declining advertising revenues and new online or other digital income.”

Team conference presentation proposal
//paste team conference presentation here//

Sales letter
December 8, 2009

Mr. James Becker, Director of Marketing Under Armour Inc. 1020 Hull St., 3rd Fl., Baltimore, MD 21230-2080 Dear James:

I enjoyed talking with you last week at Proximity’s Next Generation Media seminar in regards to Under Armour's need to promote its brand to Gen Y customers. Enclosed you will find a prospectus for the report I mentioned to you about the new viral video services like Hulu being developed primarily for the Gen y customers.

I remember you mentioned last week at our meeting that you are trying to establish a brand identity specifically with Gen Y customers to sell your products. Proximity is a service that I believe can help you to develop a media campaign that will use viral marketing and other social networking sites to help achieve your goal.

Proximity will be able to provide you with all kinds of data from surveys, focus groups, and data analysis to help Under Armour present an image to the Gen Y customers. Our faculty members also will be able to provide you guidance when it comes to advertising and marketing that will help appeal to Gen Y customers. Also, if you need so, we will be able to offer you trained student faculty members that work well with viral marketing and social networking sites like Facebook, Hulu, and Twitter to help promote Under Armour. We use students and younger faculty members because they are part of the Gen Y, and they understand what Gen Y customers look for in a product better.

James, I would now like to invite you and your staff to join our staff at Proximity’s Towson office for a special meeting on Under Armour and their goal of promoting their image to Gen Y. After the meeting, I am hoping you will stick around to talk to our faculty members and students about how they and Proximity will be able to help them in achieving Under Armour’s goal.

Sincerely, Cory Chapman Senior Media Analyst