Hulu Case
MIS 3537
Internet and Supply Chains
Spring 2014
Due Date: March 25, 2014
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.
1. How do companies such as Hulu and Netflix use supply chain to compete strategically?
Companies streamline its supply chains by becoming content owners. For example, Netflix owns House of Cards and Orange is the New Black. Whereas Hulu owns The Awesomes and Behind the Mask. These companies also expand its content distribution. Both Netflix and Hulu have expanded apps that are compatible on different streaming platforms.
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.
Companies such as Netflix and Hulu control the supply chain of digital content acquisition and distribution. Netflix offers mail delivery service and online service (Blockbuster being the biggest DVD competitor is now bankrupt). These companies invest in popular content to attract new customers, such as shows like Mad Men and Glee. The companies also acquire old shows to ensure variety and customer retention. Netflix and Hulu also license new shows that are exclusive, like House of Cards. Also, Hulu has over 170 content partners. Lastly, distribution partners can integrate Hulu’s content onto their site.
3. How does TV Everywhere pose a threat to Hulu? Describe, in your words, how Hulu should respond?
TV Everywhere poses a threat to Hulu because it enables cable users online access to shows and movies that they already pay for. This gives users access to more shows and movies, some of which are features that are not available on Hulu. This content comes from networks such as Starz, Encore, HBO, and Cinemax. Also, 92% of Americans qualify to watch TV Everywhere for free.
Hulu should respond by offering premium memberships to its users. This would include a monthly fee to watch videos without advertisements. The membership will allow users access to videos on networks like HBO and Encore. Hulu will still be able to maintain revenue from advertisements. Additional revenue will allow Hulu to offer more TV shows and movies. TV Everywhere would not be able to replicate ad-free videos. This would then give users an incentive to cancel cable.
4. The different broadcasters –CBS, NBC, ABC, Fox – have all chosen a different strategy to the internet. Which strategy is preferred?
CBS: streaming on CBS.com, AOL.com, MSN.com, Joost.com. Also has paid downloads on iTunes, Unbox, and Xbox.
NBC: streaming on NBC.com, NBC Direct, Hulu.com. Also has paid downloads on iTunes and Unbox
ABC: Streaming on ABC.com, AOL.com, Cox.net, Hulu.com. Also has paid downloads on iTunes.
Fox: streaming on Fox.com and Hulu.com. Also has paid downloads on Fox.com, BitTorrent, Unbox, and Wal-Mart.
The best strategy that is preferred is online streaming. Online streaming guarantees revenue from advertisements. Users are more inclined to stream then pay because there is less of a commitment.
5. Comment on how the digital channels put pressure on existing business models for firms in the creative industry (such as TV).
Digital channels puts pressure on existing business models for firms in the creative industry because there are more digital channels and less physical channels. In the TV industry, videos can be watched for free or downloaded for $1.99, also, monthly fees are either less or non-existent. In the music industry, songs can be downloaded at $.99 or $1.29. There is no need to purchase an entire album anymore. Users can also take advantage of digital streaming such as Soundcloud or Pandora.
Group Members:
Madelena Mele
Michael O’Hanlon
Josh Crater
Lisa Michalka