Case Study Of Hulu's Competitive Advantage

Industry Challenges
In the field of low-cost and globally-ambitious Internet subscription services, there are mainly four big competitors, Netflix, Hulu, Amazon, and HBO. In order to win as much of consumers’ time and spending as possible, each of them have different strategies to compete with each other. HBO is an original content firm getting into the Internet subscription business with HBO Go (Moskowitz, 2015). Netflix, Hulu, and Amazon are internet firms with mostly licensed content, all planning their strategy of producing original content.
Hulu is working strategically to compete with Netflix and Amazon. The creation of original series is the most challenging obstacle that Hulu must overcome. However original series are both risky and expensive. Even though Hulu has produced a number of original series itself, it

still needs a breakout hit that can really help stimulate and stabilize their position in the market; a breakout hit comparable to Netflix’s House of Cards or Amazon’s Transparent would prove beneficial.
Recently, Hulu announced to the public that they are now attracting best talents from Hollywood and is planning on the project titled “11/22/63,” a dramatic series based on the best-selling Stephen King novel, to be their ace in the hole (Spangler, 2015). As major streaming video providers, Netflix, Amazon, and Hulu have a race between them of building their own video libraries with new and appealing content. These companies do not worry if the viewers will embrace and accept the new types of services or not. Their only concern is which companies’ service that the viewers will choose.
For now, Netflix still remains the leader of the market; it reached 36% of all U.S. television households. Amazon is trailing with 13% of U.S. television households. Having reached only 6.5% of households, Hulu has nearly 9 million subscribers, compared to Netflix’s 62 million (Moskowitz, 2015). However, Hulu might possibly become a threat to Netflix in the future. As a joint venture currently owned by News Corp., Disney, and Comcast, Hulu operates in both Japan and the U.S., positioning it to become a major global competitor in the industry (Moskowitz, 2015).
Final Word on Economics
Because Hulu exists within an oligopoly market of just a few major players, there is a certain elevated level of competition arising between these few streaming services.

Since Hulu currently possess but a small fraction of the market share, there’s been an evident amount of action taken in order to compete with their more successful counterparts, mostly out of necessity (Moskowitz, 2015). One of Hulu’s more impressive moves as of late includes the acquiring of exclusive streaming rights to Seinfeld (Silbert, 2015). Similarly, Hulu paid $192 million this year to maintain its exclusive deal to stream South Park through 2019; this has been the company’s most expensive deal to date (Miller, 2015). These expensive acquisitions emphasize the fact that quality content is key to drawing in new customers and maintaining relevance for current subscribers. The slightly more thriving companies within this oligopoly have content libraries which include a mixture of innovative original content and popular classics. Making a syndication deal like this is a step in the right direction for Hulu on the way to becoming a more dynamic contender in their

industry.
Hulu is a privately owned and is not yet a publicly trading company. However, there have been two instances in the past few years in which their parent organizations have wanted to sell. Ultimately, Hulu is largely a vertically integrated company in that they produce, distribute, and market most of their own original programming from their parent organizations of NBC Universal, FOX, Fox Entertainment, and Disney-ABC Television group, although they do also have a variety of other content partners. Hulu is handling a demand for quality content by expanding their library but still falls short of industry giant, Netflix, whose award-winning original shows and documentaries continue to draw in viewers.
In many ways, Hulu should be dominating the industry; it takes the swiftness of television and puts it at audience’s fingertips faster than any other streaming service. Its pipeline of content comes directly from the networks and partners with a stake in the company. However, its competitors continue to provide ad-free services and high-quality original programming that Hulu yet to fully match. Hulu’s challenge is to build upon its strengths by fortifying its content library. Its exclusive rights to shows like Seinfeld and South Park are advantageous, but whether they will be enough to compete with and overtake its competitors in the industry is debatable. The only certainty in the streaming industry is the growth of content, competition, and therefore options for consumers.