The Future of Storytelling: The Growing Value of Hulu for the Hollywood Industry
18 Hubs-Havas Media and UCLA’s School of Theater, Film, and Television (TFT) are collaborating on the Future of Storytelling project to examine the increasing impact of UX Design and navigation on the digital media and entertainment landscape. The research analyzes how interfaces structure the distribution and presentation of content to consumers, and how this shapes the overall media experience. It especially focuses on the role of dominant ecosystems like Amazon, Facebook, and Apple. The goal is to deliver best practices for brands to engage UX-driven marketing strategies. The following is an original essay on the value of Hulu given Netflix’s growing expansion.
After struggling for years, Hulu has recently solidified its position as a true competitor to Netflix and Amazon. In the words of Vox, “Hulu has overtaken Netflix to become the best streaming service.” A common explanation is its newfound content focus. In addition to next-day availability of TV shows from four of the five major networks and many cable channels, Hulu has landed exclusive rights deals with Comedy Central, AMC, Bravo, E!, A&E, FX, Syfy, USA, Nickelodeon, Epix, and Criterion. It is now the streaming home for a variety of new and old television, both popular and award-winning, such as Seinfeld, Empire, South Park, The Bachelor, Louie, The X-Files, Family Guy, Inside Amy Schumer, The Good Wife, Top Chef, and more. Stealing a page from Netflix’s strategy, it is now working with name-brand talent to create original programming: Stephen King/J.J. Abrams’ event series 11/22/63 starring James Franco; The Path, a new show from Friday Night Lights’ Jason Katims and starring Breaking Bad’s Aaron Paul; Casual, a well-received dramedy from Jason Reitman; and Difficult People, produced by Amy Poehler. Another Netflix strategy being used is to save beloved but canceled content, as it did with The Mindy Project.
However, behind the scenes of this new digital content push is in fact an old strategy: traditional media companies “circling the wagons.” Hulu is a joint venture between Disney, Fox, and NBCU/Comcast, and recent reports show Time Warner considering a stake as well. Epix, a joint venture between Lionsgate, MGM and Paramount (owned by Viacom), recently ended its deal with Netflix for streaming rights and signed an exclusive deal with Hulu instead. Hulu also snagged the exclusive rights to Seinfeld from Sony Pictures Television. Those eight companies (Disney, Fox, Comcast, TimeWarner, Lionsgate, MGM, Viacom, and Sony) represent the vast majority of traditional Hollywood production. Most of them date back many decades; in the case of Universal Pictures (now part of NBCUniversal, itself part of Comcast) and Paramount (now part of Viacom), more than a century. They aren’t about to let a young upstart start-up, favored by Silicon Valley and Wall Street, to drink its milkshake.
Recent comments made by a number of traditional media company executives have hinted at a joint effort to limit Netflix’s ascent: Time Warner CEO Jeff Bewkes not wanting to undercut its business “by having somebody else pay a fraction of the cost and create a better inventory on the various shows you yourself invented,” FX president John Landgraf indicating a “concerted effort not to only sell to Netflix,” and Discovery CEO David Zaslav proclaiming that “it’s just not rational that… [we] have allowed that distributor to gain so much share and offer it without our brands.” The Great Freeze-Out of Netflix has begun.
Netflix’s recent surge in original programming looks a bit different in the face of this coordinated attack on its licensed content catalogue. With its stock price on a tear in the last year, partly due to cord-cutting and its aggressive international strategy, Netflix knows it’s in for some heftier bills with each new upcoming licensing agreement it has to negotiate with the traditional media companies. While the Wall Street investment spigot is flowing, the race is on to create enough original programming to make up for the eventual difficulties in licensing. Netflix will soon learn the harsh realities of content production; they won’t all be successes like House of Cards and Orange is the New Black, and the charm of being the new kid on the block will soon wear off. Traditional Hollywood companies have vast, diversified portfolios and lengthy relationships with talent for a reason.
Hulu, meanwhile, has the weight of traditional Hollywood behind it and is steadily replicating many elements of the media ecosystem within its rapidly improving website and app. Hulu’s catalogue is not only bigger than Netflix’s, but more diverse in a few significant ways. Its UX design signals a key strategy: the navigational menu gives “Latino” prime placement along with “TV,” “Movies,” “Originals,” and “Kids.” With 85 Latino content partners, including broadcast and cable networks from the U.S. and Latin America, Hulu is clearly targeting a rapidly growing demographic, what Fortune calls “The Next Media Jackpot… the $1 Trillion Hispanic Market.” Though it has made headlines with its recent original content push that is more mainstream (and white) in nature, Hulu has already been making popular Latino content with the award-winning “East Los High” since 2013, and recently acquired “Los Cowboys” as well.
A sub-menu in Hulu’s interface reveals two more identity groups targeted: “British” and “Korean Drama” (partnerships with Shout! Factory and DramaFever provide this content). In addition to this identity-based strategy, diversity in format is another layer of Hulu that differentiates it from Netflix. Not just movies and television episodes, Hulu features short-form clips, movie trailers, live events (such as the popular television musicals Grease and Sound of Music), and political events (such as the presidential primary debates). Furthermore, this diverse, interactive platform allows Hulu to innovate in the advertising space, with “engagement ads” (in exchange for shorter ad breaks, users interact with ad that proves the advertisement was watched) and “in-stream purchases” (such as the ability to order pizza from within the Hulu app). Hedging its bets between an ad-supported past and a subscription-based future, Hulu offers something for everyone.
Finally, much has been made of Netflix’s data-savvy, particularly its ability to mine its vast, global consumption data to improve both its personalized suggestions for its users and its content production for its programmers. But if Hulu is jointly owned by Disney, Fox, and Comcast, with TimeWarner potentially coming on board — are they all entitled to Hulu’s user consumption data? Do they get to look at the performance of each other’s properties? Hulu data — increasingly robust and diverse on account of its cross-platform, cross-media, cross-demographic dimensions — is potentially the secret weapon that allows traditional Hollywood to fight back against Netflix’s rapid rise. Circling the digital wagons should prove mighty valuable indeed.
18Hubs is the innovation research facility of Havas Media, headquartered in Paris, with offices in Los Angeles, Seoul, and Tel Aviv. Together with UCLA’s School of Theater, Film, and Television (TFT) and the Digital Incubator & Think Tank, 18 Hubs is developing the Future of Storytelling research. Led by Dr. Denise Mann and a group of Ph.D. students, the project studies the impact of user interface and experience (UI/UX) design in the converging media and technology industry.
Edited by Thomas Jorion
