Hulu Strategic Management

Strategic Analysis: external (customer, competitors, industry and environmental analysis) and internal (performance analysis, determinants of strategic options)

    Strategic opportunities: Barney, the outside in (visible competition strategy) vs inside out strategy (invisible competition strategy)

    Key success factors (diversification strategy? Focus strategy?),      

 External factors

CUSTOMERS –Who are they?

Hulu caters to 2 distinctive segments of customers. Consumers of the Video On Demand streaming service and advertising partners which number over 1700. Hulu has nearly 9 million subscribers, up from around 6 million in 2014, and analysts project that those numbers will double to 19 million by 2017.

Hulu offers a dual system model engaging differently with its users and advertisers.  Hulu offers a wide range of video content to its subscribers partnering with various TV networks like ABC, the CW, fox and NBC.  Hulu provides day-after access to current Hulu is low on customer loyalty as its subscriber base, which represents 14% of US broadband show has about 50% turnover rate. This seems pretty high when compared to Netflix which reported just 9% turnover rate in the past year McAlone (2016). Loyalty to content is the major factor that reduces high churn rate, as subscribers are hooked to contents that boast of blockbusters and original shows. Amazon prime video and Netflix have more award winning original contents that have given them an edge over Hulu.

Hulu’s model prevents users from skipping pre-roll advertisement, opting out of the ads automatically opts them out of the show they were viewing. This differs very much from the viewing experience of users of YouTube (a user content online video streaming), that allows users skip ads.  Hulu does offer ads viewing options that can be customized to one of three ads. In addition to the ad-supported free shows, Hulu created a subscription only model, ‘Hulu Plus which offers premium content on 4000 million Internet connected devices in the US, including the Xbox One, Play Station 4, Chromecast, Roku and Amazon Fire TV.

 Hulu creates value for advertisers by offering narrowly targeted high-performing advertising and highly customized service. The company keeps revolutionizing in the methods by which ads are shown to consumers. It offers “instream purchase widget” which will enable consumers order directly from ads. It also has a cross-platform interactive ads platform that utilizes algorithm to project what ads are suitable for different demographics. Hulu also offers the "Hulu 360 Ad," which will focus on various mobile devices and apps.

Competitors

Several companies have similar business models to Hulu in the online video streaming industry. Amongst, which are the industry leaders Netflix, YouTube, HBO Go, Amazon and followed by Sling TV, Twitch, Crackle and several less common ones. The competition in the industry is very high as there are various players in the industry offering a number of differentiation strategies to capture and maintain market share value.

Netflix is by far the biggest subscription streaming service in the business with about 60% of the whole market with market capitalization of about $53 billion, reporting 65.6million subscribers, including 42.3 million in the United States alone. In media content, Netflix also surpasses competitors with its wide array of offerings of about 6,500 to 7,000 titles at any given time. Netflix charges its new members $8.99 per month, but it doesn’t offer downloads that the Amazon Prime is well known for.

Amazon prime Instant Video

 Amazon.com has traditionally been a powerhouse in online shopping, in recent years it has expanded its offerings to include downloadable media (Rodgers 2011)

The giant e-commerce company launched its video streaming service which is available for PC, Mac, Kindle Fire HD, IPad and other minor devices.  This service is free to customers who already have the Amazon Prime membership, which bundles video streaming with free two-day shipping, a necessity in today’s online shopping standard. In addition, the $99/year Prime account includes amazon streaming music service, which can be shared with friends and family.  This makes it the cheapest compared to Netflix and Hulu, although lags behind in content selection and platform availability. According to CEO Jeff Bezos, Amazon reportedly spent $1.6 billion on the service in 2014, which led to an increase in original content amongst which are “Transparent”, “Alpha House “and “Mozart” to mention a few. The service is widely popular amongst consumers although it doesn’t possess the cult-like following that Amazon possesses. (Carter and Pino) 2016