With Time Warner on board, Hulu could finally give consumers everything they want

Hulu

Time Warner Inc.'s new media strategy appears to boil down to something like, "if you can't beat 'em, join 'em."

The defining question facing most large broadcast media or cable distributors is how they should deal with streaming services like Netflix, Amazon.com's Prime Streaming Video, and Hulu.

However, with Time Warner's recent decision to purchase a minority stake in Hulu, the cable giant's plans to thrive in the streaming era have recently come into sharper focus.

The ripple effects of this deal are still fanning outward across the media landscape.

Time Warner invests with Hulu

According to recent reports, Time Warner Inc. paid $583 million to acquire a 10% stake in streaming service Hulu. This makes Time Warner a bedfellow alongside the triumvirate of media giants Walt Disney, 21st Century Fox, and Comcast, which also owns the streaming service.

The new valuation effectively triples Hulu's 2012 valuation, itself a boon for Walt Disney, 21st Century Fox, and Comcast. It also bears noting that Time Warner will reportedly not gain a seat on the Hulu board of directors as part of its investment, effectively limiting its role to that of a silent partner in the streaming enterprise. However, that doesn't mean Time Warner doesn't have a role to play in assisting Hulu's growth strategy.

Additional reporting surrounding the deal asserts Time Warner will allow several of its marquee television networks to be included in Hulu's purportedly forthcoming over-the-top cable streaming service. Media accounts claim channels, including TNT, TBS, CNN, Cartoon Network, and Turner Classic Movies, will appear in both live and on-demand formats in the forthcoming service.

On top of Time Warner's coveted cable content, Disney, 21st Century Fox, and Comcast also control the majority of the most-watched networks in the U.S. Between the three networks, a brief list of their broadcast assets includes the ESPN family of networks, Fox News, FX, National Geographic Channel, USA Network, Bravo, and more. Suffice it to say, combining the media properties of Time Warner Cable, Comcast, 21st Century Fox, and Walt Disney into one jointly owned streaming service is arguably one of the most important developments in this space in recent memory. It also happens to be very bad news for the likes of Amazon, Netflix, Dish Network, and Sony.

Hulu

Picking winners?

Thus far in its evolution, the business of delivering broadcast content over the Internet, so-called over-the-top services, or OTT for short, has dealt with the fundamental issue of cable industry opposition.

Netflix and Amazon created valuable services by first digitizing massive vaults of old films and TV services. Their move upstream into original content development helped make them into viable alternatives to cable among more cost-conscious consumers. However, the cable giants still maintained a competitive edge when it came to current seasons of popular content, and particularly live programming like sporting events and live news.

Seeking to combat the cable providers, companies with ties to the media industry, namely DISH Network and Sony, attempted to license so-called "skinny bundles" of roughly 30-40 popular channels that were delivered over the internet. However, DISH Network's and Sony's OTT services also came with drawbacks. Sony's PlayStation Vue service only works through its own PlayStation platform, meaning consumers would have to own Sony's expensive gaming console to access the service. Both DISH Network's and Sony's PlayStation Vue also lacked the streaming content backlogs of Netflix and Amazon that consumers also loved.

Now with Comcast, Time Warner, Walt Disney, and 21st Century Fox all cooperating for a live cable OTT service that also reportedly accesses the same movie and TV archive as Netflix and Amazon, Hulu appears poised to offer something no other streaming service has yet been able to achieve: everything.

Up until this point, Hulu had been something of a disorganized underdog in the streaming world, more a victim to stagnation because of its muddled ownership structure, not a beneficiary. However, with Time Warner now on board, it appears the script is about to flip in the broadcast media space, and that's a storyline media investors across the spectrum will certainly want to closely monitor in the coming weeks and months.

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