The Japanese division of online video service provider Hulu is to be acquired by Nippon Television Network Corporation in early spring 2014, subject to regulatory conditions and approval. As part of the agreement Hulu will license its brand and technology to a subsidiary of Nippon TV and will provide support services so that Nippon TV can continue run the service using the same platform.
Hulu Japan was launched in September 2011. It offers unlimited access to premium movie and TV content from 50 content partners on a subscription basis for 980 yen (USD 9.6) per month. It is accessible on connected TVs and BD players, games consoles, and mobile devices, as well as via PCs. Hulu Japan reported that it doubled its subscriber base in 2013.
Financial conditions of the deal have not been disclosed.
Hulu Japan has been struggling to repeat the success of its US sibling. The lack of a free service tier and limited local content are some of the key reasons behind this.
Currently Hulu Japan offers only a paid-for standalone subscription service which provides access to premium movie and TV content. Unlike Hulu US, Hulu Japan does not offer a free-to-view ad-supported option. Hulu US, being a joint venture of NBCUniversal Television Group, Fox Broadcasting Company and Disney–ABC Television Group, offers a selection of catch-up and other free content on an ad-supported basis, as well as a paid-for monthly subscription service, Hulu Plus, that offers an expanded content library, less advertising, and wider connected device availability.
Nippon TV is one of the largest commercial broadcasters in Japan with a wide selection of content partners as well as its own production companies. In January 2014 Nippon TV purchased the majority stake in Tatsunoko Production, an animation company specialising in original TV anime production. Although there is no indication as to whether Nippon TV will implement any changes to Hulu Japan’s business model, look and operations, it is definitely in a strong position to transform Hulu Japan’s business model to emulate the successful US version. The wide selection of Nippon TV content would breathe new life into mostly US show-centric Hulu Japan and add to the diversity of genres.
The other reason behind the modest success of Hulu Japan is the wide availability of strong rival local mobile video services - both advertising funded players such as NHK World, and subscription-based services such as Docomo Video and BeeTV by NTT Docomo, Au Video Pass by KDDI, and Uula by Softbank.
For Nippon TV, which has already made the steps into the OTT world with transactional on-demand service NITTELE on demand and an ad-funded catch-up service, the acquisition of a subscription service such as Hulu serves as a further step into expanding its premium paid-for online video proposition. With a strong OTT proposition now covering all business models and continuous social TV activity with JoinTV, Nippon TV can differentiate itself from other online video providers by engaging in cross-promotion between services helping to boost awareness and appeal – Hulu is in position to be a prime beneficiary of this.