More than a year ago, Hulu.com launched with much fanfare, and Dealscape wondered if the video Web site would take off. Apparently, Hulu has not only caught on, but it skyrocketed in March into one of the top-three U.S. video properties for
the first time, with 380 million videos viewed, according to the latest report from comScore Video Metrix. Maybe that's what propelled Walt Disney Co. (NYSE:DIS) to acquire a stake in Hulu.com Thursday, joining NBC Universal, News Corp. (NYSE:NWS) and Providence Equity Partners as partners in a joint venture stake in the video site.
The deal will allow Disney to showcase its library of full-length television programming, such as "Lost," "Grey's Anatomy" and "Desperate Housewives." The move follows through with Disney's strategy of increasing its audience for its television programming, which can also be found on iTunes and ABC.com. Details of the deal were not disclosed, but, according to MarketWatch, the transaction has instilled fears in cable operators that "consumers will eventually become so enamored on online viewing that they may decide to cancel cable service."
That scenario is certainly feasible especially if the economy continues to deteriorate and people look to scale down their discretionary spending. It happened in the newspaper industry when content was given away for free and to a lesser extent in the music industry prior to iTunes when file sharing sites gave away music for free.
But for Disney the deal seems to be a bonanza. The company can grow its audience for its television programming through this new outlet while garnering a new revenue stream from the ad supported site. - Gerald Magpily
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