Why Netflix, HBO, And Amazon Owe Their Success To Hulu
Ten years of
innovation, lesson No. 3: You can’t—and shouldn’t—go it alone.
This is the third essay in our
series of 10 Lessons From 10 Years
Of The World's Most Innovative Companies.
Remember when Netflix was a DVD-by-mail service?
And its chief rival was the brick-and-mortar outlet Blockbuster? Feels like an
eternity ago. Now Netflix looks over its shoulder at HBO on one side and Amazon on the other. But it was the
breakthroughs generated by the less-praised and underappreciated Hulu that
pointed the way to all of their success.
Fast Company put Hulu on
the cover of second World's Most Innovative Companies issue in
2009. That decision was not a dig at Netflix or a mark of suspicion about its
business. Rather, it was a reflection of game-changing steps that Hulu was
taking. At that time, Hulu was run by former Amazon executive Jason Kilar, who
had to manage an assortment of owners—including both Fox and NBC—that had yet
to embrace the idea of streaming their content. While Kilar had access to a
rich trove of TV shows, he faced an ownership structure that was internally
divided. For several of his many-headed bosses, the prospect of Hulu was at
best a test, and at worst a threat to their core operation.
Kilar’s tactic was to play these owners off against each other
just enough to keep them at bay, while he and his team furiously worked to
create a new kind of viewing experience. Suddenly, streaming TV and even movies
was easy, fun—and legal. At that point, the model was ad-supported in a
user-friendly way that still hasn’t been replicated: Viewers could choose which
ads they wanted to see, increasing the value for advertisers by constructing a
qualified audience.
Eventually, Hulu’s corporate structure—not to mention the rise of
streaming elsewhere, among its owners and most notably via Netflix—put the
company on its heels and Kilar out of a job. But the user experience, design,
and mass-market acceptance of streaming were all created or accelerated by Hulu.
The most common narrative of innovation success often follows a single
disruptor—Steve Jobs, Phil Knight, Mark Zuckerberg—without appreciating how
much rests on the shoulders of progenitors and peers who advanced the game.
Today, of course, we expect to be able to stream everything via
apps. (Back in 2008, most viewing happened on a desktop computer via the web
browser.) Hulu is among a constellation of providers continuing to advance a
revolution whose ultimate outcome is still unclear. Hulu hasn’t reaped the
lion’s share of the rewards from its early innovations, but that doesn’t mean
it didn’t have a powerful impact. And it continues to play a role in pressing
Netflix, HBO, and others to keep advancing.
ROBERT SAFIAN
https://www.fastcompany.com/3068297/most-innovative-companies/why-netflix-hbo-and-amazon-owe-their-success-to-hulu?utm_source=mailchimp&utm_medium=email&utm_campaign=fast-company-daily-newsletter&position=4&partner=newsletter&campaign_date=02262017
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