Sources: Hulu hopes to launch an online TV service that streams popular broadcast and cable TV channels in Q1 2017
Context & Ripple Effects
Hulu has been an on-demand library service; this report says it wants to add live broadcast and cable channels in Q1 2017, effectively building a virtual pay-TV bundle. Hulu confirmed the plan the next day, so this is no longer just sourcing noise.
The timing matters because Hulu is not alone: Bloomberg reported days later that YouTube is building Unplugged, its own subscription offering of cable channels over the internet, putting the two platforms on a collision course for the same cord-cutter audience.
First-order effects
- Hulu shifts from competing with Netflix-style libraries to competing with the cable bundle itself, forcing it to negotiate carriage of popular broadcast and cable channels rather than just licensing shows after airing.
- YouTube's Unplugged project now has a named rival with a target launch window, turning 'cable channels over the internet' from an experiment into a two-horse race for 2017.
Second-order effects
- Content owners gain leverage as multiple internet distributors bid for the same channels — leverage Viacom later exercised by pulling its content from Hulu and Netflix to stock its own streaming service distributed through US mobile carriers.
- Pricing pressure follows: Hulu's eventual under-$40 monthly price point with CBS, cloud DVR, and its VOD catalog set a benchmark that any rival bundle has to beat or match.
Third-order effects
- If the pattern holds, the pay-TV bundle gets recomposed online: distributors like Hulu and YouTube assemble channel lineups while networks like Viacom go direct-to-consumer, splitting the industry between those who own the pipe and those who own the programming.
- Live linear channels become table stakes for streaming platforms, eroding the distinction between 'streaming service' and 'TV provider' and pushing regulators and carriers to treat internet TV as the successor to cable.
The trend: Pay-TV is migrating from the cable bundle to internet-delivered live services, with distributors and network owners racing to control the customer relationship.