Disney buys 30 per cent stake in Hulu

Valerie | 01 May 2009, 08:19

As c&binet reports that Time Warner is looking to devolve its struggling AOL internet division, Disney is consolidating its role as content creator and distributor. The Wall Street Journal reports that Disney has reached a deal with Hulu to buy close to a 30% stake in the video service, joining NBC Universal, News Corp., and investor Providence Equity Partners in the venture.

Financial terms have not been disclosed but the agreement will see TV shows from Disney-owned channels like ABC, SoapNet, and ABC Family coming to Hulu, including Lost and Grey’s Anatomy.

Hulu’s audience grew 20 percent in March compared with the previous month with 380 million videos and overtook Yahoo as the third-largest video site by monthly unique viewers. The Comscore rankings revealed that YouTube held the top spot, accounting for 99% of all 5.9 billion videos watched on Google properties. Fox Interactive Media was second with 437 million videos watched online.

According to TechCrunch, YouTube should be worried by the news:

“Hulu is becoming the preferred distribution channel for the big media companies. And it is succeeding in attracting the fickle Web audience. This should worry YouTube, which is still casting about for a business model that will pay for its enormous storage and bandwidth costs. The media companies cannot ignore YouTube just yet, but by strengthening Hulu they can give it their best content first.”

Online video is a potentially lucrative market for big businesses, with media companies offering clips, TV shows and films on the Internet as advertisers and viewers migrate online. Developing a viable content monetisation model without turning away viewers will be a key challenge to overcome and aligning the needs of content creators, distributors and consumers will play an important role in achieving this.