The big problem is Hulu’s problem. As some astute commenters have noted, Hulu’s secret sauce is its branded content, most of which comes from its owners: News Corp, NBCUniversal, and Walt Disney. Hulu’s UI and end-user experience are very good (say, 3 out of 4 stars, if I rated it) but, as a commented noted, nothing proprietary or patentable. IMO, Hulu v1 was just a Chinese-coded copy of ABC.com’s video player, which was the first branded full-episode product among the TV networks back in 2006.

So any acquirer of Hulu is really just buying the content – but there’s no way those three content kings would ever sell their content to Yahoo (or any other dotcom for that matter). I think it gets worse for Hulu, actually, because, as GigaOM pointed out, an IPO is impossible, so all that’s left is an acquisition. But the media owners (the P.E. firm investor is another story) won’t sell. They’ll end up suing each other in a three-way lawsuit. Most media-giant joint ventures end in lawsuits. Hulu will be the same story.

I do agree that Hulu CEO Jason Kilar is a rock star. My colleagues tell me his Amazon days gave him F-U money, so he’s doing Hulu for the thrill and the challenge (good for him). But an exit for Hulu isn’t possible and he probably knows that.

“Availability Notes: Customer trust is hard won, easily lost.

On January 9, we removed nearly 3 seasons of full episodes of ”It’s Always Sunny in Philadelphia.” We did this at the request of the content owner. Despite Hulu’s opinion and position on such content removals (which we share liberally with all of our content partners), these things do happen and will continue to happen on the Hulu service with regards to some television series. As power users of Hulu have seen, we’ve added a large amount of content to the library each month, and every once in a while we are required to remove some content as well.

This note, however, is not about the fact that episodes of ”It’s Always Sunny in Philadelphia” were taken down. Rather, this note is to communicate to our users that we screwed up royally with regards to how we handled this specific content removal and to apologize for our lack of strong execution. We gave effectively no notice to our users that these ”Sunny” episodes would be coming off the service. We handled this in precisely the opposite way that we should have. We believe that our users deserve the decency of a reasonable warning before content is taken down from the Hulu service. Please accept our apologies.

Given the very reasonable user feedback that we have received on this topic (we read every twitter, email and post), we have just re-posted all of the episodes that we had previously removed. I’d like to point out to our users that the content owner in this case – FX Networks – was very quick to say yes to our request to give users reasonable advance notice here, despite the fact that it was the Hulu team that dropped the ball. We have re-posted all of the episodes in the interest of giving people advance notice before the episodes will be taken down two weeks from today. The episodes will be taken down on January 25, 2009. Unfortunately we do not have the permission to keep the specific episodes up on Hulu beyond that. We hope that the additional two weeks of availability will help to address some of the frustration that was felt over the past few days.

The team at Hulu is doing our best to make lemonade out of lemons on this one, but it’s not easy given how poorly we executed here. Please know that we will do our best to learn from this mistake such that the Hulu user experience benefits in other ways down the road.

Sincerely,

Jason Kilar, CEO, Hulu”

Om’s idea is a good one. Hulu is blowing up. It would be a great asset to own. I’m just clarifying why. That was the only thing wrong with what he wrote. The premise is sound though.

Thank god for yahoo shareholders that you are not running yahoo!

Pretty sites are not what drives value, see google, amaZon, craigslist, etc.

The hype that press has bestowed on hulu and great Content is the key to their success.

By the way, hulu can not be a good standalone business

Simple formula :

Margin=revenue-partnersplit-costofoperations Since partnersplit is 90% and cost of streaming is high margin=shit

This is NBC and fox trying to stop the YouTube drain.

At any rate, Fancast doesn’t have that many fewer users than Hulu.com proper. Hulu really beats it via syndication, since it is the host site of the content, and Fancast is not. Moreover, the advertising on Fancast, and even YouTube, of the Hulu brand on each video played there tells users to just go direct to Hulu rather than watch it via Fancast. It’s like Yahoo advertising Google back in the day. Users aren’t dumb. And moreover, users are lazy! If they can get everything in one place, they’ll default to the source. In other words, once you get to a baseline satisfactory UI, this is about CONTENT. And over time it will become even more so.

@Om, I believe you like the convenience of Hulu in terms of the availability of this content, in one centralized location, at the hosted source, and not watching on a syndicated downstream player. Features are just icing on the cake. Unless you just like green and charcoal that much? I’ll put it to you another way. What is it about Hulu’s experience, versus Fancast’s, that you like so much better? I don’t think you can articulate a truly meaningful list of features.

@Rocky, you missed my point #3 above. Hulu has a far, far better experience than NBC or Fox, for the same content. Hulu wins hands down. There is no excuse for it. NBC should fire someone. You have to go through too many hoops on that site. It defies common sense, especially when they have Hulu in the family showing them the way. It’s merely an experience problem, not a technology problem.

Again, I’m not saying Hulu is doing anything wrong. They are doing a lot right with their experience. They have a great player too. But not so much that it trumps the fundamental importance of being the hosted aggregated destination for Fox and NBC content. That is what George Kliavkoff kickstarted, and he deserves that credit. Jason K may be the greatest operator ever but George is the one with the vision that drives 90%+ of Hulu’s traffic. And he hired Jason to boot.

2009 will be interesting. Do the networks allow Hulu to become another YouTube in terms of gaining hand in distribution of their content, or do they wake up to the monster they’re allowing to be built and start to instead promote their own destination sites? (And do a better job of developing those sites, now that they have the template for what that experience needs to look like, at minimum, to hold an audience?) There is no practical reason why at this point they need to let Hulu take the prize.

@les madras: Everything I’ve seen on Hulu has had all paid ads, but the major thing I’ve seen that they do wrong is showing the same ad each time. So if I’m watching a 1 hour episode of Chuck and there are 6 commercials (can’t remember the exact number) then I get the same 30 second commercial 6 times. Why not show 6 different commercials. The ad either worked or didn’t work the 1st time so the additional 5 times are a waste of the advertiser’s money. So far that’s pretty much the only mistake I would say that Hulu has made.