The End Of Hulu As We Know It (And Comcast Feels Fine)

What the hell is going on at Hulu? Monday’s mysterious story in The Wall Street Journal portends significant changes in 2011 that may just be scratching the surface of what’s to come for the service.

As “people familiar with the matter,” a journalistic euphemism for “stakeholders intent on leaking very specific information,” told WSJ, the initial public offering that was in the works is off the table, “at least for now.” On the table: new subscription plans to complement Hulu Plus.

These two developments beg to be decoded further. Let’s dive in.

The fact that Hulu lacks long-term rights to its programming was “one reason” offered for the IPO postponement. That smells like a red herring given this wasn’t exactly a surprise to NBC Universal (NYSE: GE), News Corp (NSDQ: NWS). and Disney (NYSE: DIS), primary stakeholders alongside Providence Equity Partners.

A likelier rationale: IPOs require consensus, and that’s not going to happen with this many cooks in the kitchen. There’s no shortage of issues the principals could be disagreeing on here, but let’s focus on the biggest question mark that has hovered over Hulu for about a year now: Comcast (NSDQ: CMCSA), which is about to take over NBCU’s stake, needs Hulu like a fish needs a bicycle.

A site that has built its fan base by offering TV episodes for free online is not of much use to a cable operator that wants to monetize that same window through VOD and TV Everywhere or Fancast or Xfinity or whatever cockamamie new name Comcast concocts next–all of which lack the brand power Hulu has built.

And so Comcast can’t simply pull the plug on Hulu. If it keeps its stake in the company, the best move is to steer it further in the direction of Hulu Plus, which has a subscription model and multiplatform presence that fits in with the cable operator’s drive toward authenticated viewing experiences.

And that may explain the second new development here, this talk of additional subscription models. Perhaps Hulu becomes the new face of TV Everywhere, with much less emphasis on the free catch-up programming opportunities on which Hulu made its name.

But that still leaves the matter of correcting one of Hulu Plus’ biggest problems: a skimpy selection. That’s why the WSJ tells us “the subscription offerings would entail Hulu securing rights to distribute content it doesn’t already have.” Hulu is on the hunt for more content, which could not be better news for content owners including some of Hulu’s stakeholders.

That means Hulu is not going to let Netflix (NSDQ: NFLX) or Google (NSDQ: GOOG) snap up all the content–the resulting bidding war will drive up the price of programming, perhaps to the point where digital doesn’t mean pennies anymore.

That’s not a bidding war Hulu necessarily wins. Which is just one of the reasons next year is going to be a make-or-break year for the service.

Could Hulu actually not exist at this time next year? It’s not like the new-media world hasn’t demonstrated a ferocity in recent years capable of killing even a great brand. But the irony is that Hulu’s old-media roots could be its saving grace: If there’s one thing a mogul never, ever does it’s walk away from a great brand.