As Networks Extend Agreement, Can Hulu Ever Fulfill Its Potential?

Hulu is close to extending its agreement with its TV networks that will ensure that the video service will remain intact for the foreseeable future, according to AllThingsD.

The agreement will keep programming from NBC, Fox and ABC on the service as the parent companies of NBCUniversal, News Corp. and Disney work out the direction that Hulu will take in years to come. What does the agreement mean? It is likely a stay of execution for the Web video service, keeping the status quo as the television giants fumble for the future of premium content on the Internet.

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Hulu’s Life 0f Limbo

Hulu is one of what Internet TV provider Roku calls “the big four.” The others are Pandora, Amazon Instant Video and, of course, Netflix. The free service available on the Web allows users to watch new shows within 24 hours of when they aired but limits the catalogue of shows to four or five from current seasons and seasons past. Hulu Plus, for $8 a month, has a fuller catalogue as well as support for devices like the iPad and Roku.

What does the rumored Hulu extension mean for consumers? In the short term, not much will really change. The networks continue to provide it content and derive revenue from Hulu and Hulu Plus. At the same time, none of the networks have thrown their full weight behind Hulu, making it a bit of a forgotten castoff in the web of network empires.

AllThingsD’s Peter Kafa points out Disney CEO Bob Iger’s statement on Hulu from the company’s earnings call this week; “We don’t intend to let a platform–even one we own–get in the way of doing what we think is right.”

What Will The Networks Do?

The question is, what do Disney and the networks think is right? ABC is owned by Disney. One of the most popular applications on the iPad over the last several months has been the ABC Player, an application that streams ABC content and special features from shows like No Ordinary Family, Cougar Town and Desperate Housewives. Disney, not content with just making its shows available on Hulu, wants to keep its content within its own network funnel as much as possible.

If the ABC Player becomes a revenue hit for Disney, look for NBC, Fox and CBS to create their own dedicated apps, moves that would undercut Hulu and its chances of becoming the de facto location for watching new shows on the Internet. As it stands, the networks other than ABC only have news applications available, such as Fox News and CNBC. NBC has an application called NBC live that has the tag line of “watch shows on your TV and interact on your iPad.”

Then there is the elephant in the room when it comes to new shows and movies – Netflix. So far, the networks and studios (one and the same when it comes to Fox Pictures and NBCUniversal) are playing a vicious game of keep-away when it comes to allowing Netflix next-day rights. Essentially, the feeling among the networks is that if Netflix is allowed streaming rights of new material, all bets on Hulu or their own dedicated online channels are off. Hence, it is in the best interest of the networks to keep Netflix at arms length, feeding it bygone content from eras past, like once lovable sitcom Cheers.

Hulu continues to float on top of deep currents, its life strings attached to behemoths of media that do not trust each other nor the potentially disruptive child they have created. Will Hulu ever fulfill its potential as the go-to source for premium content on the Internet? Not under the current agreement and, as time goes on and the networks do little to innovate it, probably not ever.

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