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May 20, 2024 39 mins

In 2007, News Corp and NBCUniversal announced a joint venture. It would be a video streaming service that would deliver film and broadcast TV content online. Detractors called it the Clown Co, but it took the name Hulu and would become an important force that would shape the business of online streaming.

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Episode Transcript

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Speaker 1 (00:04):
Welcome to Tech Stuff, a production from iHeartRadio. Hey there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and How the
tech are you? You know, I've talked about streaming an
awful lot on the show. Now just for context tech Stuff.

(00:27):
This podcast began after Netflix had already kind of got
the ball rolling back in January two thousand and seven,
so I didn't have an episode that covered the story
of Netflix launching its online video streaming But in twenty
thirteen we did do an episode about the Big three
streaming services, which at that time included Netflix, Amazon, and

(00:52):
Today's Star Hulu. So we're doing actually a two parter
on Hulu. This will be part one. So even back
then we mentioned how there were other offerings available beyond
the Big three, but today it's almost a joke with
how many services are out there, and it's come as
no surprise that we're starting to see these different services

(01:14):
kind of glom on and merge together, either in bundles
like the one Comcast is going to offer with Netflix,
Peacock and Apple TV Plus, or in outright mergers and
acquisitions such as what's happened with Disney and you know Hulu.
It's almost like the streaming landscape is slowly transforming into

(01:34):
what cable television used to be. And we already know
that cable TV's business model has a ceiling because we
hit that ceiling. That's why we're seeing things kind of
in a decline or one of the reasons why I
shouldn't be so definitive, I guess. Anyway, all that's beside
the point. I want to talk about Hulu. How Hulu

(01:54):
got started, because it's an interesting origin, and how the
service and company evolved, and how now it is co
mingling with Disney Plus, even as the actual acquisition deal
is still kind of finalizing, despite the fact that Disney
paid the quote unquote final fee last year. That whole

(02:15):
story is just it really just points to corporate shenanigans, honestly,
in my opinion at least, So let's start off at
the beginning, where I am told it's a very good
place to start. So hulu story, at least, the part
of Hulu's story that faced the public, began in March
two thousand and seven. Hulu, which was not named at

(02:37):
this point. It didn't have its name, but what would
become Hulu was announced as a joint venture between newscre
and what at that time was just plain old NBC Universal.
Comcast would announce plans to acquire NBC Universal two years later,
and so things would get more complicated down the line.
Now this is where my memory actually plays tricks on me,

(03:00):
because when I was thinking about this before I actually
started to dig into all the different articles and blog
posts and stuff around the time of Hulu's launch. In
my head, Hulu was meant to be a counter to
Netflix because Netflix was getting into video streaming. But as
it turns out, that really isn't the case when you're

(03:21):
talking about the two thousand and six two thousand and
seven era, because at that stage, Netflix wasn't really seen
as that large of a threat, right. I mean, Netflix
had killed Blockbuster arguably, but it wasn't thought to be
setting its sites on traditional broadcast and cable media. Instead,
Netflix was essentially viewed as Blockbuster by mail because it

(03:44):
was much better known for its DVD and Blu ray
rental services than as a video streaming platform. So this
was well before Netflix would shake things up with its
own original programming like House of Cards. House of Cards
didn't debut until twenty thirteen, so Netflix was not seen
as a existential threat at this point. Instead, Hulu's reisondetre

(04:09):
had more to do with piracy that was happening on
YouTube and how internet streaming was starting to show signs
that it could impact traditional cable television, as well as
concerns about a company that was on a metaphorical rocket
ship around this time, and in that case, I'm specifically
talking about Apple, not Netflix. But first let's start with YouTube.

(04:33):
So Steve Chen and jau Ed Karim and Chad Hurley
founded YouTube in two thousand and five. These days you
can find epic long videos on YouTube. In fact, over
the weekend yesterday, I was watching a four hour video
from Jenny Nicholson, who produces phenomenal video essays. They're few

(04:55):
and far between, but she puts a ton of work
into them, and she did a four hour video about
her experience at the Star Wars Galactic Cruiser Hotel at
Disney World, and it's fascinating. It's a little it's very
cringey at times if you're not into like participatory theater.
Even as someone who has performed in participatory theater. I

(05:16):
found it a bit cringey at times, not because of Jenny,
but because of the situation that was going on. And
it's also like just frustrating to see someone who is
clearly so passionate about Star Wars and who has a
really good platform ended up having a really, I would argue,
lackluster experience for a premium price. Anyway, I don't know

(05:37):
Jenny Nicholson, she doesn't know me. I just like her work.
And the point was that today you can watch four
hour long videos on YouTube if you want to. But
you know, the interesting thing is when YouTube first launched,
there wasn't really a limitation on video length back then either. Now,
the resolution for YouTube videos was way way lower, but yeah,

(05:58):
you weren't limited to short videos. However, that changed in
the spring of two thousand and six, and the reason
for that change is because a lot of the longer
videos that were getting uploaded to YouTube were bootlegs or
pirated copies or unauthorized uploads of films and TV shows.

(06:18):
So that was what was making studios angry. It was
copyright infringement. You know, it was going up without their
consent and without their compensation, and in fact, in those days,
YouTube wasn't monetizing anything. This was in the growth phase
for YouTube, so the whole media industry was starting to
get pretty prickly about this. And you know, just a

(06:40):
few years earlier, that industry ended up banding together and
did a number on peer to peer networking services like
Kaza and Napster like they sued those companies into oblivion.
So obviously YouTube was not super keen on get the
studio's iire in that same way, it could be a

(07:04):
threat to their very existence. So in March two thousand
and six, YouTube issued a new limitation on videos. They
could only be up to ten minutes long, and then
you would get cut off, So you couldn't post a
full television episode or a movie in one video. If
you were really trying to share that kind of thing,

(07:24):
you had to find places to break up the video
into ten minute or shorter increments and then do a
whole series of them. So you would have to go
to a lot of trouble. In other words, in order
to get just an episode of a television show up,
let alone a movie. Plus you would still potentially get
into trouble down the line if the studios found out, hey,

(07:46):
you're publishing stuff without our permission. But this is why
older YouTube videos, the really long stuff, would be divided
into multiple parts. I'm reminded of the infamous Star Wars
episode one review by Red Letter Media, the mister Plinkett
review that was originally in several segments because old man
mister Plinkett had a lot to say about it. Also,

(08:06):
I didn't realize this episode was going to be so
Star Wars heavy. That wasn't my intent. But in the
back half of two thousand and six, Google acquired YouTube
for the princely sum of one point sixty five billion
dollars in Google stock. Google definitely had a vested interest
in making certain that the piracy issue was addressed because
as a big company that had deep pockets, and you know,

(08:27):
there's nothing stopping the media companies from coming after that. Filthy,
filthy luker. If Google seemed complacent with piracy while the
company discouraged the practice, it's you know, the users who
ultimately were steering things, and the folks at major media
companies were not thrilled about not having control over this.
You did have major studios establish their own YouTube channels,

(08:49):
but I bet that didn't feel so great. To them. Either,
YouTube could help with marketing and spread awareness of shows
and that kind of thing, but monetizing your online publishing
was a different matter. I mean, the official YouTube Partner
program didn't launch until the end of two thousand and seven,
and you know, most businesses are not keen to give
away for free what they typically would earn revenue on,

(09:13):
so finding a way to deliver television content online in
a way that could actually generate revenue was a long
term goal. Perhaps of more concern, however, was Apple, at
least to NBC Universal's CEO Jeffrey Zucker at the time.
This has to do with the media industry's challenge of
figuring out how to incorporate streaming at all in its

(09:35):
overall strategy, let alone how to set streaming up as
a potential successor to broadcast in cable distribution. Apple already
had an established business in which folks could browse the
iTunes store for media content, which included television shows and films,
and users could purchase those things through the iTunes store,
which made Apple kind of a gatekeeper for media. Plus,

(09:57):
Apple could take a hefty cut of those transactions, which
means a lot less of that cheddar would make its
way to the studios that were actually responsible for producing
the content. And just as companies aren't keen to give
away for free what they usually make money off of,
they're also not super happy to share their lunch with
someone else. Dollars going to Apple should be going to
the studios. Gush, darn it. So this is what Jeff Zucker,

(10:20):
the CEO of NBC Universal, was up in arms about.
He proclaimed that iTunes, while an effective way to deliver
television content to digital customers, was really a way to
go quote from dollars into pennies end quote on those transactions,
meaning that media outlets like NBC Universal should be making
much more per transaction than what they were, and that

(10:42):
the business model heavily favored the gatekeepers like iTunes. So
what would be the solution. Well, the solution is to
make your own media streaming platform, as Bender from Futurama
would say, and you would control this platform. Zucker made
some pretty big decisions leading up to the announcement of Hulu.
He decided not to renew NBC Universal's contract with Apple,

(11:05):
which meant NBC content would disappear from the iTunes store.
He also had the company closed down the NBC Universal
YouTube channel, so you couldn't get NBC Universal content there either,
at least not legally, and all the while, NBC Universal
began to work with newscre the owners of Fox at
the time, to create what would become Hulu. All right,

(11:29):
we're going to continue this story in just a moment,
but first let's take a quick break to thank our sponsors.
So we're back, News Corp. Owners of Fox, twentieth Century
Fox at that time, and NBC Universal, which would soon

(11:52):
become the property of Comcast, get together and decide that
they want to make their own streaming thing, but they're
not entirely sure what that's gonna be. Originally, the plan
was to make a way to share or post content
from these two companies on various places across the Internet,
specifically on sites like Yahoo, Aol, and the king of

(12:15):
social media MySpace. That's a trio of names that at
one point in the Internet history, all three of those
were considered unassailable. They were thought of as being giants
and too big to fail, which really just proves the
too big to fail concept just isn't true. You're never
too big to fail. We humans can always find a
way to fail if we have enough time on our

(12:36):
hands to do it. Anyway, you probably know that you
can embed media players on web pages, right If you've
ever visited a web page that had a YouTube player
embedded in that page, you know what I'm talking about.
You can watch a YouTube video within a web page
without actually having to go to YouTube itself. Well, that's
what Hulu was trying to do originally. Of course, it

(12:58):
wasn't called Hulu yet. In fact, it wasn't called anything yet.
But the basic idea was to follow this particular strategy.
So why were the companies thinking in this way? What
largely had to do with the monumental acquisition that news
Corp Had made In the summer of two thousand and five.
News Corp bought MySpace for a whopping five hundred eighty

(13:19):
million dollars. This would later turn out to be a
colossal mistake, as news Corp would ultimately dump my Space
for just thirty five million dollars in two thy eleven.
So buying something for five hundred and eighty million and
then selling it for thirty five million not great. In fact,

(13:40):
for some it would rank as one of the worst
deals in tech history. I don't know if it quite
merits that because there have been some other whoppers that
have happened, Like it's not good, but there have been
other really bad ones. I will say that the MySpace
acquisition is perhaps one of the most infamous bad tech deals. Anyway,

(14:00):
NewsCorp had this social media platform, and they had it
since late two thousand and five. And remember Facebook wouldn't
really start its trajectory of crazy growth until late two
thousand and six, when it would finally open up to
people who weren't you know, college students. And it's easy
to forget, but we're talking about time when MySpace was
almost synonymous with social networks. I mean, nobody thinks about

(14:24):
it today, but at the time it was the dominant
social platform. So the thought was that this social platform
asset could serve as a brilliant way to serve media
to customers. You know, design a web delivery system that
leverages the places where people were already going online. That
would include the AOL landing page because tons of people

(14:45):
were still using Aol as their Internet service provider, or
the Yahoo landing page because Yahoo was essentially serving as
a web portal to the rest of the world. Wide Web,
and then MySpace the dominant social platform. You wouldn't have
to train people to go to your website. You would
just establish a foothold in the places where people were
already congregating. This strategy would change in large part due

(15:08):
to the companies coaxing a project leader from a different
Internet giant. So I'm talking about a man named Jason Kylar,
who was a senior vice president at Amazon, and he
got lured away to become the head of this still
unnamed project between newscre and NBC Universal. Now, Kaylar's career

(15:30):
would have a lot of interesting intersection points with streaming
in general and with Hulu in particular. So for example,
before he worked at Amazon, Kyler was an analyst with
the Walt Disney Company for a couple of years. Obviously,
Disney will go on to become an important part of
the Hulu story, and I might as well talk about
his time after he left Hulu, because this isn't an

(15:52):
episode about his career specifically, although he does play a
very important part in this particular episode. He would stick
with Hulu for six full years, which you know, it's
not bad for a CEO of a startup company. If
you're not like a founder, especially like he was brought
on to do this, although you could argue that the
work he did was at least equivalent to a regular founder.

(16:13):
He would then go on to co found a video
platform site called Vessel. He did that in twenty thirteen.
Verizon would acquire Vessel, and not long after that, Verizon
would shut down Vessel. But hey, you know that's a
big payout, baby. So Kyler would also sit on the
board of directors for several different organizations and companies, and
then he would become CEO of WarnerMedia in twenty twenty,

(16:34):
which means he was there during the early launch days
of HBO Max, that streaming platform, and he stuck around
as CEO of WarnerMedia until AT and T decided to
divest itself of WarnerMedia and sell it off to Discovery,
whereupon David Zaslov would take over the whole shebang. And
we all know about the Zaslov regime over at Warner

(16:58):
Brothers Discovery. So his departure, he's kind of been keeping
himself busy by being on the board of directors of
even more organizations and companies. But throughout his entire career,
he's been heavily involved in media in general and streaming
in particular, and it's a pretty impressive career. So Kyler
comes over from Amazon and leads this project, and the

(17:20):
strategy then starts to shift. It moves away from this
idea of an embedible player that will live in other
places to a destination media site similar to YouTube, but
specifically crafted to host studio produced entertainment. Right YouTube is
the user generated video site. You go to YouTube typically

(17:42):
to watch stuff that other YouTubers have created, not to
watch things that were produced by an established media company.
So this project would be more for the established stuff,
the studio stuff, the professional stuff, and the companies were
also hoping that this would discourage Netflix's growing relevance. Again,
Netflix really wasn't a threat yet, but the concern was

(18:06):
that they didn't want a company that was not part
of the established media industry to become the gatekeeper for
the online branch of media. For the longest time, television
and film studios had reigned supreme. They didn't have to
answer to anyone else. Really, you know, they were times
where they got broken up by various regulators and governments

(18:29):
because they owned so much of the entertainment landscape that
it was considered to be a monopoly. Like when a
company owns not just the movie studios but also movie
theaters and film processing companies, that becomes a problem. So
all that got broken up years and years and years ago,
but they still had a ton of power, so the
idea of seeding some of that power to a company

(18:50):
like Netflix was not very palatable when Kyler took over
the project. The nickname that folks gave to this because
it still didn't have an official name yet, was Clown
Co or Clown Company, And apparently it got that nickname
because the general consensus was any joint project that would
be helmed by two or more established media companies was

(19:13):
bound to fail. At some point, one company would try
to exert more authority than the other or object to
some fundamental aspect of the project, and nothing would ever resolve.
You would never get consensus among the stakeholders for what
was the right thing to do, and the whole thing
would crumble in on itself. Tech blogs, in particular, prophesied

(19:36):
doom from the get go. In July two thousand and seven,
a company called Providence Equity joined News Corp. At NBC
Universal as a stakeholder in the project, purchasing a ten
percent ownership in Hulu, and this was quoted as being
somewhere around one hundred million dollars of equity in the company.

(19:56):
Just pretty darn impressive. Now, the name Hulu, I don't
know exactly when it was arrived at, but I do
know when it was revealed. It was revealed in August
two thousand and seven when the website actually went live. However,
this website went live with no video. You couldn't go
there to watch anything. It was kind of like a

(20:17):
site that was parked there and was announcing the name
of the service, so there was no streaming player yet.
Kyler later said that the actual name came from a
Mandarin word that means gord, with the idea of Hulu
containing all this stuff in it, it'd be a streaming
service with access to lots of content, similar to a
stuffed gord. I guess I don't know. I don't really

(20:40):
get the analogy that much. I don't know how much
the actual word was super important. The point is the
name was short, it had a nice sound to it,
it was easy to remember, and folks wouldn't make it
so much fun of it, like you didn't hear people
making as much fun of the name Hulu as they
later would. For like Quibi Quibi was the source of

(21:02):
endless jokes, Hulu, I don't remember a lot of people
making fun of it. While the site would go into
beta testing before the end of two thousand and seven,
it would not officially launch as a service until October
two thousand and eight. By that time, Netflix's streaming service
had a year's head start, but Hulu had something that
Netflix didn't have. Hulu, with its agreements with the various studios,

(21:27):
which would change out fairly frequently in the year leading
up to launch, would be able to host episodes of
shows the day after they originally aired on TV. Netflix,
by comparison, would only be able to add shows in seasons,
So you would get an entire season of a show
added to Netflix once the company had secured a licensing

(21:47):
deal for that particular season, and then you could watch
all the episodes in that season, but you wouldn't be
able to see the latest stuff. Hulu was kind of
the opposite. You could see the latest stuff, but you
couldn't watch a full season early on. Hulu was free
to use and it was also ads supported, but Kyler
was also careful not to overload ads on episodes, which

(22:08):
is something I wish other companies would practice. I'm not
naming names, I'm not making any accusations about anyone specifically,
but on a totally unrelated note, I am obligated to
take another break to take our sponsors. We'll be right back. Okay,

(22:35):
so we are back. And besides me being cheeky about ads,
Kyler was very much aware of the effect ads have
on viewership. He would later publish a blog post that
would outline certain observations he had made while in the
entertainment business, and one really big one was about ads. Specifically.

(22:57):
He wrote in a memo that quote, traditional TV has
too many ads. Users have demonstrated that they will go
to great lengths to avoid the advertising load that traditional
DV places upon them. Setting aside sports and other live
events programming, consumers are increasingly moving to on demand viewing
in part because of the lighter ad load end quote.

(23:20):
To that end, Hulu typically limited ads to two minutes
of advertising per half hour of content, which was far
below what you would find if you were tuning in
to live TV. For films, studios had the option to
allow users in ad free experience during the film itself
if in return, the users agreed to view ads up
front before the film started. You've probably seen a message

(23:42):
that was something like, thanks to our sponsors, you can
watch the following presentation free of ads, or something like that.
In that same memo in which Kyler pointed out the
issue with ads, he also talked about how audiences were
increasingly migrating to on demand viewing experiences. Traditional television requires
viewers to watch on their schedule, not the viewers, So

(24:06):
that's frustrating, right when you have to be available when
the program airs. Technology started to allow for time shifting.
I mean VCRs led the way, at least for those
of us who are willing to learn how to set
a VCR to record a specific channel at a specific time,
which wasn't always user friendly or easy. Then we could

(24:26):
watch the programming whenever we wanted to, not just when
it was scheduled to air. More sophisticated methods like DVRs
would make this far more easy and accessible, and audiences
would respond to that. They really enjoyed the freedom that
this represented. The era of must SETV was changing. We
weren't necessarily glued to our couches on Thursday nights or whatever,

(24:46):
and the arrival of on demand viewing made this even better.
A service that let you select whatt to watch when
you wanted to watch it without having to decide ahead
of time, like without having to set a DVR or
VCR a big deal. Hulu, despite a bumpy ride in development,
was poised for great success. Sure, the media companies that
signed on to be part of the project kept shifting around,

(25:09):
which meant it was hard to predict what material would
actually be available to viewers once Hulu went live, but
it still set itself apart from both YouTube and Netflix.
There were limitations, however. Typically Hulu would only have a
handful of episodes available for viewing and would remove the
oldest of those episodes while adding new episodes, so you
might only be able to access the last few episodes

(25:31):
of any given show, but you wouldn't be able to
really dive into the entire history of a program. This
was in an era in which Kylar was trying to
establish Hulu and when companies were even learning which strategies
would be viable, so like this was all very experimental.
Everyone seemed to know that it would take time for

(25:51):
streaming to shake out to become a sustainable model, and
that this would mean that there'd be a lot of
investment and trial and error in the early days, and
that it would require careful thought to find a way
to make streaming work long term on a financial level.
That is. Meanwhile, the cord cutting apocalypse was kind of
on the horizon. Now. It wasn't quite to the point

(26:12):
where people were suddenly like severing their cable connections right
out of the gate, but young adults who had spent
more time consuming content online than through traditional media were
less likely to become cable subscribers, and that meant that
simply through attrition, the cable business was facing a crisis.
So there was a healthy incentive in place for streaming

(26:32):
platforms to figure it all out, and it really big
incentive for traditional media companies to figure a strategy that worked,
because if they didn't, they were kind of dooming themselves.
In two thousand and nine, Disney would join the Hulu party. Literally,
they purchased a stake in Hulu. Obviously, this was well

(26:53):
before the Walt Disney Company would launch its own Disney
Plus platform, so At this point, Disney, NBCU Universal, and
NewsCorp each owned approximately equivalent portions of Hulu, and then
you had ten percent left over for the investment company.
Disney agreed to make available some of their older Disney

(27:13):
films on the service, and they also chose Hulu as
the home for ABC programming because Disney owns ABC as
well as some of the originals that Disney had produced
for the Disney Channel. Now, at this stage, Hulu was
competing against a different streaming platform, and we're still not
talking about Netflix here. Instead, we're talking about TV dot Com,
which I had completely forgotten about. TV dot Com. I

(27:35):
knew about it when it came out, but I hadn't
thought about in years. But that was a company that
CBS Corporation acquired in two thousand and eight because again CBS,
since it wasn't a stakeholder in Hulu, wasn't exactly eager
to allow these competing media companies to be gatekeepers for
CBS materials. So instead they go out and they buy

(27:56):
their own streaming platform. At one point, the partners behind
Hulu had some of their programming on TV dot Com
as well, but that would change when CBS took control
and Hulu pulled all of its programs off TV dot com.
The camps were starting to form around streaming, with no
one wanting anyone else to be the dominant player or
to be able to have leverage over them. The big

(28:18):
networks continued their long standing rivalry, and pretty much all
of old media was looking at Netflix with suspicion also YouTube.
Even though YouTube, I would argue, wasn't really in the
same space as the others, it was a hated rival
among media companies because it was stealing a whole lot
of eyeballs, kind of like the Corinthian in the Sandman comics.

(28:38):
In twenty ten, Hulu introduced a subscription service called Hulu Plus.
Now this was different from the Hulu Free service and
that viewers would be able to access full current seasons
of shows, not just the last few episodes. You could
watch a full season at least the latest one. You
couldn't necessarily watch every season of a Showers would also

(29:00):
get earlier access to the latest episodes. Essentially, they'd be
able to watch an episode when that show went to
air on television, you could access it online if you
were a Hulu subscriber. That subscription cost nine dollars ninety
nine cents per month when it launched, and to the
bewilderment of many, that service would still include ads supported content,

(29:21):
so you're not paying to get ad free content, it
would still get ads. Some folks asked why would there
still be ads if you also had to pay a subscription,
and the best answer seemed to be, we want money
on that front. Twenty ten is also when Hulu planned
to hold an IPO, or initial public offering. That's when
a privately held company becomes a publicly traded company, but

(29:44):
Hulu would in fact not go public that year. Ultimately,
the stakeholders decided to keep it a privately held company,
and there were rumors of a real IPO cropping up
in late twenty twenty three, but as we will learn,
that's not the path that the company, but he would
ultimately take. One thing Hulu did fairly early on was
to produce original content specifically for the Hulu platform itself,

(30:09):
and this began in twenty eleven, which is two years
before Netflix would do the same thing. So for the
first few years, Hulu really just existed as a place
where folks could go to watch recent television programs, and
it was pretty handy if you happen to miss an
episode of your favorite show, you know, if it was
a show that was on a network that partnered with Hulu,

(30:29):
at least you could potentially catch that episode starting the
day after it originally aired, and you would also see
fewer commercials than you would if you had watched it
on television in the first place, which is not a
bad deal. Before getting into the content game directly, Hulu
also served as a place where web originals could find
a home. So these were programs made by other companies

(30:51):
but with the web in mind, as opposed to on
traditional media. The first actual Hulu original was a show
called The Morning After. This was a sort of pop
culture roundup show. The first scripted series would come out
in twenty twelve, and it was called battle Ground, which
was a satirical political comedy series that the showrunners originally

(31:13):
pitched as a TV show, but they couldn't find a
network to pick up the series. Hulu provided an alternative
pathway to find an audience. Hulu would increase its focus
on original content, and this gradually meant that the original
strategy of providing access to broadcast TV would start to
decline in importance, and another shift was coming as well.

(31:34):
Jason Kyler, who had led the company from when it
was still taking shape in two thousand and seven, announced
he would be resigning from the company in twenty thirteen. Now,
under Kyler's leadership, Hulu had gone from this nebulous idea
that the industry in general predicted was going to be
a colossal failure and had created a business that had
an upward revenue trajectory that was pretty impressive. For example,

(31:56):
the Hollywood Reporter said that in twenty twelve, Hulu posted
a sixty five percent increase in year over year revenue. However,
percentages never tell you the full story, right Because if
I gave you a dollar today and then tomorrow I
gave you two dollars, that's a one hundred percent increase
day to day. But that's still just two dollars or
three dollars total. However, that being said, the twenty twelve

(32:19):
revenue was six hundred and ninety five million dollars, which
is not chump change or you know, clown company dollars,
I guess. Also, by this time, the stakeholders had been
whittled down to news Corp, NBC, Universal, and Disney because
the three other stakeholders had bought out Providence Equities stake
for around two hundred million dollars according to Bloomberg. Now,

(32:41):
remember when Providence first invested, they were taking like one
hundred million dollar equity steak in Hulu, so they essentially
doubled that, which is not bad. Kylar wasn't the only
executive leaving the company at that point. Another was the
chief technology officer for Hulu, a guy named rich Tom,
which you know, that's a great name. Oh you mean

(33:03):
rich Tom. The rumor mill said that Kyler's decision was
one fueled by frustration he had with his corporate overlords,
that that Kyler had really wanted to secure more licensing
deals in order to feature a wider spectrum of programming
on Hulu, but that he was being stonewalled by the
various corporate stakeholders and denied these. These budgets and licensing

(33:27):
fees were growing pretty hefty, and this was largely because
Netflix was pouring buckets of cash into its own strategy.
And we'd get back to the conundrum that the media
companies were in, so in an ideal world from the
studio perspective, not the audience perspective. But if you're a studio,
the ideal is that you would have your owned and

(33:47):
operated streaming service specifically for your studio's output. And of course,
as we go down the timeline, that's kind of what
would happen, right, because we would get a bunch of platforms,
ridiculous ones. You know, you look out there and you've
got your your Peacock Paramount plus, CBS All Access, HBO Max.
All of these would start to pop up many years

(34:08):
further down the line, so we would see this kind
of come to pass. But that's something that all these
studios wanted early on. They just didn't have the infrastructure.
They didn't invest in building that out. So back then,
back in twenty thirteen, there were only a few options
open to you. If you wanted to make your material
available for streaming. You could sign on with Netflix, or

(34:31):
you could sign on with Hulu. Anything else was seen
as being a little too obscure to make much sense,
like it just wouldn't be a good return on investment.
And if you didn't sign licensing deals, well then you
were leaving money on the table. So while studios weren't
keen to turn a service like Netflix or Hulu into
a gatekeeper. There weren't a lot of alternatives, and with

(34:51):
Netflix willing to shell out crazy amounts of cash for licenses,
it meant that Hulu was losing out. Now, as we
would see, this isn't an episode about Netflix, but Netflix's
strategy would ultimately be to invest more and more in
original programming and kind of wean itself off of making
these big licensing deals, which suited the studios fine because

(35:12):
they would prefer to not have their stuff on Netflix
if they could have it on their own platform anyway.
The other big rumor behind Kyler's departure was that he
was still focused on growing the business and his corporate
overlords were hoping that he would switch more to a
near term profit model. These two things are not always

(35:32):
in alignment, right, because to grow often it means you
have to spend more money, invest more. You're not going
to see as big of a return. The folks who
were owning the stakes were getting itchy. They wanted profit,
and it also sounds like the various stakeholders were at
odds with one another over how to even achieve the
goals that they had, Like even when they had goals

(35:53):
that were in common, they disagreed with how they should
go about achieving those goals, and that put Hulu in
kind of a corporate ug of war between the different stakeholders.
So I wouldn't blame Kyler for a moment if that
contributed to his decision to step down. I've been in
corporate tug of wars in the middle of one, and
it is the most frustrated I think I've ever been professionally. Anyway,

(36:16):
it sounded kind of like the board level of Hulu
was turning into what naysayers had been predicting back in
the Clown Company days, right Like, it sounds like that's
what was coming true. I already mentioned that Kyler would
go on to co found a different video streaming site
similar in some ways to YouTube, and that Verizon would
subsequently acquire and then later shut down that website, and

(36:36):
that Kyler then went on to become the CEO of
Watermedia under at and T. Interestingly, in twenty sixteen, Time Warner,
which would later become WarnerMedia, acquired a ten percent steak
in Hulu. So again, those worlds would intersect a couple
of times. I've said, like the corporate overlords of Hulu.
The partnerships have changed over time, so at one time

(36:58):
Warner was one of the owners. When Kyler announced that
he was going to depart from Hulu in twenty thirteen,
the company had yet to announce a replacement, and in fact,
it took a little while before that would happen. It
was a luxury that a privately held company can enjoy,
I guess because if you're a publicly traded company, succession
planning is something that investors take very seriously see also Disney.

(37:19):
But eventually Hulu announced that Andy Forcell, who had been
senior vice president of content at Hulu since two thousand
and seven, would take on the job as an acting CEO.
He would not be on that job for long. He
would actually leave Hulu in late twenty thirteen. That's the
same year that Kylar stepped down. So we're talking one

(37:40):
year two different CEOs, really three, because the third one
would take over after Forcell would leave, And interestingly, Forceell's
journey would take him on to become the chief operating
officer at Full Screen and then Ottermedia. Now, if you
listen to my episodes about Rooster Teeth, those companies were
going to sound familiar. He was part of that whole thing,

(38:01):
and then ultimately would end up becoming the head of
HBO Max over at WarnerMedia, which meant that once again
he'd be working under his old boss, Kylar, who was
the CEO of WarnerMedia at that time, and just like
in twenty thirteen, Forceel would leave WarnerMedia around the same
time that Kyler did after AT and T divested itself
of WarnerMedia and sold it to Discovery. So time is

(38:24):
a flat circle. Mike Hopkins, who had been president of
Fox Networks Group, was then tapped to be CEO of Hulu,
and this capped off an era in which many of
the leaders who were part of the original team who
built Hulu had at this point left the company. Reportedly,
this had a pretty negative impact on employee morale. Hopkins

(38:44):
would stick around for four years and provide some leadership
stability at a time when it was sorely needed in
the company. He would eventually leave Hulu to become chairman
of Sony Pictures Television, and then after a couple of
years of doing that, he would go on to join
Ammazon on and became a senior vice president for Prime
Video and Amazon Studios. But anyway, Hopkins takes the helmet Hulu,

(39:07):
you might wonder what else was going on during his
era as CEO, which went from twenty thirteen to twenty seventeen.
That is what we're going to start to cover in
the next episode, along with the story of where Hulu
would go from there and how the company would reach
where we are now, which is in this weird limbo
because of a disagreement between Disney and Comcast over how

(39:27):
much the company is actually worth. We'll touch back on
that later this week. In the meantime, I hope you
are all well and I'll talk to you again really soon.
Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio,

(39:48):
visit the iHeartRadio app, Apple Podcasts, or wherever you listen
to your favorite shows.

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