Hulu Case Questions
MIS 3537 Internet and Supply Chains
Due Date: March 20, 2017
Refer to the case “Hulu: An Evil Plot to Destroy the World” from the HBSP website.
Answer the following questions briefly (4-5 lines each):
1. Draw the supply chain for Hulu and highlight content acquisition and distribution. How do companies such as Hulu and Netflix use supply chain to compete strategically?
2. Research on the internet and list some examples of how companies such as Netflix and Hulu are controlling the supply chain of digital content acquisition and distribution.
3. How does TV Everywhere pose a threat to Hulu? Describe, in your words, how Hulu should respond?
4. The different broadcasters –CBS, NBC, ABC, Fox – have all chosen a different strategy to the internet. Which strategy is preferred?
5. Comment on how the digital channels put pressure on existing business models for firms in the creative industry (such as TV).
All groups (expect the group making the presentation) are required to submit a printout of their answers to the instructor at the beginning of the class. Also, be prepared to discuss the case in the class.
Team #4:
1. Companies such as Hulu and Netflix make all the content available in one spot rather than having to go to different websites. This makes it more efficient for the customers because it is less time consuming to search for different videos on different sites. Hulu was able to do this by acquiring television content from several partners. Hulu is able to bring content to the audience, rather than forcing the audience to come to one site to watch shows through content distribution partners. These distribution networks allow web users to discover Hulu’s content while Hulu’s partners benefit from the users spending time on their site. (Supply chain was drawn separately; can be posted if needed)
2. Netflix’s and Hulu’s supply chain management involves various supply chain management technologies such as real-time content, big data analytics, and machine learning. Both Netflix’s and Hulu’s digital content acquisitions include licensing and purchasing through, and partnering with the content providers. Also, both of them start to produce their own original digital contents. The Big Data analytics helps both Netflix and Hulu collect and analyze data of their users to understand their users’ patterns and preferences. A better understanding of their users assists both Netflix and Hulu in acquiring and producing digital contents that will be liked by their users. In terms of distribution, syndication time of paid television and movies are different between Netflix and Hulu. Netflix does not stream movies until 90 days after they are shown on cable television. However, Hulu brings the content to the users within the allowed syndication airtime specified by Hulu’s partners. Also, Hulu closed deals with more than 30 affiliated websites enabling content owners to connect with users across destinations sites such as Facebook.
3. TV Everywhere is an initiative put in place by Comcast and Time Warner that allows cable customers with an existing internet subscription to access premium content online. This means no additional subscription or fees to the customer for using this service. The biggest threat this causes to Hulu is customer base. As stated in the case study, almost 92% of customers already qualify for this service, and they are already an existing customer to the cable network. In addition, many big name networks have jumped onto this initiative, some who were weary of internet content before. Hulu has two main options: join TV Everywhere initiative or offer content that is not produced anywhere else. Hulu could easily join with TV Everywhere and offer similar services to customers with cable subscriptions. In contrast, Hulu could also create premium content that will differentiate themselves from other online streams. For example, Amazon is producing shows that are exclusive to Amazon. If Hulu did not want to create content, they could collaborate with networks to run special content or exclusive viewing for Hulu users.
4. From a business-owner perspective, NBC is the broadcaster with the preferred strategy to the internet in terms of relationships, both between users and distributors. Their strategy is to get the content out there when and where people want it, but also to preserve the dual revenue stream and the relationships they have with their distributors.
5. Digital channels (online) are now often producing and creating their own content along with using content made for large broadcasters that can also be redistributed through the online medium. There are Amazon Originals, Netflix Originals, and Hulu Originals which are rapidly becoming becoming popular series and movies that these online-streaming companies offer along with the non-native content. They no longer sacrifice profits from licensing fees because they own the content. This emerging, popular, and accepted original content development has changed the business model where these popular streaming services used to only redistribute content from large broadcasters, but now also create and fund the development of their own proprietary shows.