Businessmodel of Hulu

Customer Segments

Hulu primarily serves mass market consumers who wish to have on-demand access to quality television programming and movies from a variety of sources. Recent reports estimate that the Company has around 9 million individual subscribers in the US. The service is not available internationally.

According to reports within the advertising sector, around 82% of Hulu’s users are aged between 18 and 49, with 75% of users viewing content via a web-connected TV.

Hulu also includes advertisers and agencies among its customers providing a large, captive audience for their advertising content in the form of un-skippable ads.

Value Propositions

Hulu’s streaming service enables users to view premium television and movie content on-demand, via any device and in any location with an internet connection. This convenience and flexibility is the Company’s greatest value to consumers.

What sets the Company apart from its competitors, however, notably Netflix and Amazon Instant Video, is its content. Hulu is the only service that provides access to recent programms, including episodes from the current, airing seasons of various shows. This includes ‘day after rights’ that allow Hulu to stream episodes on its Hulu Plus service that premiered on television just the day before.

Hulu also offers original programms from big names such as JJ Abrams, Stephen King and Billy Eichner, as well as streaming exclusives that are not available elsewhere, including the Wayward Pines, Empire and South Park series. Hulu is also of value to advertisers, expanding their audience and allowing them to target specific demographics.

Channels

Hulu is available via its mobile and desktop websites at www.hulu.com. The Company also provides a range of apps for mobile phones and tablets covering the iOS, Android and Windows Phone operating systems, and can be accessed via smart televisions, gaming consoles, set-top boxes and blu-ray players.

Customer Relationships

Access to Hulu’s streaming platform is entirely self-service. Subscriptions can be purchased, managed and altered through the Company’s website, as well as through its various apps. Users are able to access video content immediately following completion of the registration and billing process. No interaction with Hulu representatives is required.

The platform also has some automated functionality, including viewing suggestions based on user viewing histories. Hulu provides technical assistance to its users in the form of troubleshooting pages, set-up guides and contact forms via the online Hulu Help Centre.

The Company also interacts with its users, keeping them up to date with the platform’s developments, via its Twitter, Facebook, Tumblr, Youtube, Instagram and Google+ accounts.

Key Activities

Hulu primarily provides online television and movie streaming services to the mass consumer market, through partnerships with a range of content providers. It also offers content distribution options, such as commercial media feeds and individual embeddable players, and enables consumers to share content on their personal websites, social networking profiles, and blogs through embed codes.

Hulu also serves advertisers and agencies with a range of ad solutions that enable companies to associate their brands with specific video content and reach their target demographics more effectively. The Company additionally provides advertisers and marketers with ancillary consultancy services relating to research, reporting, insights, and analytics services.

Key Partners

Hulu’s key partners are its content providers, distribution partners and advertising partners. The Company has more than 500 content partners, comprising high-profile production companies, movie studios and televisions networks, including NBC Universal, Comedy Central, BBC, Fox, Showtime, VH1 and ABC.

Hulu also collaborates with around 2,000 advertising partners – comprising advertising agencies and big brand companies – to provide appropriate commercials to its user base. Advertising partners can sponsor seasonal tentpoles, such as Summer TV on Hulu and Hulu for the Holidays, as well as thematically grouped content, including Huluween and Black Friday/Cyber Monday, and can collaborate with the Company through local advertising and targeted advertising solutions.

Hulu also entered into a recent partnership with electronics company Samsung to provide a virtual reality app that can be accessed via the Oculus-powered Samsung Gear Virtual Reality platform.

Key Resources

Hulu’s key resources are its streaming platform, its content and its partnerships. The Company’s content in particular is responsible for much of the platform’s unique value in an increasingly competitive streaming market. This includes Hulu’s original content, its exclusive streaming content and its collaborations with content providers.

The Company’s advertising partners also play a key role within its business model, accounting for a significant proportion of its annual revenue.

Cost Structure

Hulu’s principal costs relate to the development and maintenance of its streaming platform, its IT infrastructure, and its management of content partnerships. Hulu pays its content providers in the form of licensing fees for content, shares much of its advertising revenue with its content partners.

The Company also has revenue sharing agreements with its distribution partners. In addition, Hulu incurs costs relating to its operation of a network of servers and data centres.

Revenue Streams

Hulu makes money through the sale of service subscriptions and the generation of advertising revenue. Subscriptions currently account for a little over half of Hulu’s annual revenue, and is expected to comprise a growing proportion of the Company’s revenue over the coming years.

Hulu offers two subscription packages. The first is priced at $7.99 per month and comes with a limited amount of advertising within its programming. The Company’s premium subscription package costs $11.99 per month and is completely ad-free. Hulu’s ad revenue is shared with its content providers, who take a 70% share of all advertising revenue. The Company also shares a small proportion of its revenue with its distribution partners.

In 2015 Hulu reportedly brought in around $1.6 billion in annual revenue.