Hulu has been up for sale for a bit, and today we learn that Netflix has passed on the opportunity to purchase its competitor. It’s a smart move actually, because of the antitrust hurdles it would face, and in reality Hulu decoupled from its media giant parent would cost millions more than they paid for it just to keep up with the content licenses. The only worth Hulu brings at this point would be any patents it might have and that’s probably something that’s not included in the sale.
The recent departure of new movies such as “The Social Network” shows some cracks that are appearing in Netflix’s business strategy. Their contract with Starz which allowed them to play recent Sony Releases had a clause against too many subscribers and they hit that limit, and a similar clause for Disney is close. Netflix’s profit post taxes and expenses is less than 200 million, with revenue about 1.8 billion. Content creators want to charge more, but also want to run their own setups. This is not surprising considering that these same studios who make the content are about as smart as the music industry in selling itself that they caved on music prices when Wal-Mart threatened to replace the music section with more shoes.
The studios have a storefront that is universally available across more devices than they would be capable of building an access model. If they take their content and try their own stores, they’re not going to find any customers, and if they think they’re not getting a good deal from Netflix, good luck on getting any kind of break from Apple if it chose to enter the streaming market.