Piracy up at Fox? Hulu's Kilar getting the last laugh as sale plans questioned

editor's corner

Jim O'NeilWhoops! There it goes! One week after Fox started holding back new episodes of some of its summer programs from free viewing on Hulu and its own Fox.com website, illegal downloads of Hell's Kitchen and MasterChef have surged.

Blog TorrentFreak said illegal downloads of Hell's Kitchen increased 114 percent in the five days after it aired last week, and MasterChef downloads were up 189 percent following the enforced waiting period.

Fox last week announced it would delay its shows from airing on the free sites for eight days, an effort, it said, to both protect the value of its content and the business of its pay-TV partners. It did strike a deal allowing authenticated subscribers of Dish Network (Nasdaq:DISH) and premium site Hulu Plus to watch the episodes within 24 hours, but that's so, well, pre-Millennial. And, despite Fox's attempt to rouse the rabble into pressuring operators via a virtual mail campaign to adopt its TV Everywhere initiative, not a single cable company or telco has joined the fray. With the launch of Fox' new Fall season just weeks away, especially its big hit, Glee, that can't be sending any feel-good vibes to Hollywood.

Is anyone really surprised that piracy is on the upswing? As TorrentFreak pointed out, Hulu's increasing popularity has coincided with a drastic decline in TV-show piracy. Viewers have generally been comfortable watching the shows--and the advertising they carried--legally on the website.

Online on Hulu. Whodathunk it?

Hulu video

Click here to watch a video about Hulu and the future of TV.

Well, Hulu CEO Jason Kilar, for one. But, you know what they say about a prophet in his own land?

Six months ago, Kilar authored a lengthy blog post, an obituary, really, for the existing ad-supported TV model. The future of TV, he said, belonged to online video sites like Hulu and Hulu Plus.

Nevertheless, last month, Hulu owners News Corp. (NYSE: NWSA), Disney (NYSE: DIS) and Comcast's (Nasdaq: CMCSA) put the business up for sale. This week, today, actually, bids for the sale are scheduled to start landing on their doorsteps.

But should the triumvirate go through with it?

Not if you count Wall Street analyst's Richard Greenfield's vote. The media guru for BTIG said Hulu's owners "should be going out of their way to retain ownership of Hulu and allow it to flourish."

He pointed out that the site is on pace to collect $500 million in revenue this year, up from $263 million a year ago; that it's seen by 24 million to 28 million unique viewers a month, that it logs 160 million viewing sessions each month, and that viewers spend more than 200 minutes of viewing monthly. Only YouTube has more viewing time, and Hulu is the top-rated site for online video ad impressions (that according to comScore).

So, sell it to make a quick buck? Not in Greenfield's view because it's a potential gold mine, especially for content owners, who, as Hulu grows, will see more dollars on an annual basis.

"The big media companies have all failed when it comes to digital. While its hard to pin down why they fail, even if they acquire or invest in the right assets, the DNA of traditional media companies seems to have a negative impact on virtually all digital initiatives," Greenfield wrote. "Hulu is the exception to that rule. It has flourished, despite ownership by the major media companies. Yet, this is the business that the media companies are looking to sell--does that make sense?"

He also contends that Huu is "the perfect weapon for networks/content creators to embrace so they can grow revenues and profits, even if the current multichannel ecosystem becomes unglued over the next decade."

As Kilar pointed out, consumers love it, and more are discovering it all the time.

That's why some of the biggest names in the tech industry are lining up to try and steal it away from Big Media before one of the owners wakes up and realizes they're about to trade their future for their past.--Jim

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