Hulu is a 'viable competitor' to Netflix, analyst says

Despite its consistent position at the bottom of the top three SVOD providers in the U.S., Hulu may not stay there for long. As networks look for new ways to compete in the over-the-top space, Hulu may be part of their strategic options--and thanks to a slew of exclusive content deals, may already be stealing eyeballs from Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN).

The provider is already "emerging as a viable competitor that many media companies are embracing," wrote Michael Nathanson of analyst firm MoffettNathanson in a blog post.

Netflix, of course, has a huge lead in terms of subscribers--the provider topped 62 million subs worldwide in the first quarter, while Hulu has just 9 million. However, Hulu grew its paying subscriber base by 50 percent year over year, and those subscribers are watching 30 percent more content on the service. That, plus deals with networks like AMC Networks, FX and Discovery that will bring several popular series exclusively to Hulu, has the company brimming with optimism. "If you take only one thing away this morning, know that 2015 is the year Hulu will break out," CEO Mike Hopkins told attendees at its recent upfront in New York.

For SVOD providers, content has become a big chunk of the budget. Increasing costs to license existing content have both Netflix and Amazon, among other OTT providers, hunting for new ways to keep subscribers entertained and have more control over their library--hence their focus on original content.

Hulu, however, has a "war chest" of cash thanks to its owners, and "its decision to allow networks to stack shows while embracing a TV Everywhere strategy has created a recent wave of new content signings," wrote Nathanson. Its plans appear to align with broadcast networks' plans to rebuild momentum by getting their series out to more viewers.

The scan of Hulu's prospects was part of a larger look at the media and entertainment industry by MoffettNathanson in the wake of its summit, held last week. While noting that speakers tended to downplay the impact of cord-cutting on pay-TV and traditional broadcasting, Nathanson said that no one yet agrees on the best model for the next generation of media and entertainment.

For more:
- see this blog post (reg. req.)
- The Verge has this story

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