Entertainment and Media: Markets and Economics. Professor William Greene. 1/53. Entertainment and Media: Markets and Economics. Business Models for Online Entertainment. 2/53. The Market. Copyrighted material Entertainment products: Music, movies, books, news/sports/weather, videos, …
Professor William Greene
Employing a well known theorem: $240M/0.016 = $15.0B
(Not yet… as of 10/31/09)
Company: Founded in March 2007, Hulu is co-owned by NBC Universal, News Corp. and Providence Equity Partners. It is operated independently by a dedicated management team with offices in Los Angeles, New York, Chicago and Beijing.
Content: Hulu brings together a large selection of videos from more than 130 content providers, including FOX, NBC Universal, MGM, Sony Pictures Television, Warner Bros. and more. Users can choose from more than 1000 current primetime TV hits.
Business Model: Hulu is free and legal through an advertising supported model.
Videos are available for unlimited streaming; watch favorite shows and clips over and over, for free. Videos contain fewer ads than on TV. Advertisements appear during normal commercial breaks. Hulu acquires the rights to distribute its videos, making them available to users legally
Advertising: Hulu gives advertisers an opportunity to associate their brands with premium online video content, connect with highly engaged consumers and extend their reach beyond Hulu.com to Hulu's distribution network. Additionally, Hulu offers and is committed to the continued development of innovative, new advertising experiences.
Valuing “The Right”
Blanket License, zero marginal charge
Advertising value (price) =f(time, duration, quality, placement)
The distinction between “prime time” and other times is built into the price.
Shifting time slotsEliminate some competition across networks
Implication for advertising pricing?
Reduce? Fewer views
Increase? More likely to find larger audience