Why Apple and Hulu Aren't Made for Each Other
Apple is in early talks to acquire Hulu--or at least so says the hot Apple rumor du jour--but not only is this acquisition a long shot, it's also not necessarily a great idea.
First of all, early talks don't mean that Apple is about to buy Hulu. As All Things Digital's Peter Kafka put it, "If you stop by a Subaru dealer and end up kicking the tires on a new Outback, are you in early talks to consider a bid on a new Outback?" Maybe so, he wrote, but no one will be surprised if you leave the dealership, and so far he hasn't heard from any sources who think Apple's a serious bidder.
But let's humor the idea anyway. While an Apple acquisition of Hulu seems to make sense because of Apple's interest in selling content on its own hardware, I can think of a few reasons why the companies would be better off separate:
Hulu Loves Flash. Apple Does Not.
John Gruber alluded to this point in a snarky remark on his Daring Fireball blog. Hulu's Website is based on Adobe Flash, which Apple notoriously detests. While you might argue that Apple could just convert the Hulu Website to HTML 5, that's not possible yet because HTML 5 lacks a solution for digital rights management. Until a DRM solution exists, Apple would have to bankroll an operation that continues to support Flash, even as the company tries to kill format through other means.
Hulu Gives Away Content. Apple Does Not.
Although Hulu has been pushing its $8 per month Hulu Plus service lately, the company's free Website remains a big draw. Apple, meanwhile, sells premium content on premium hardware. You don't see Apple giving away free music and videos on iTunes to promote its paid content. I concur with Kafka at All Things Digital, who says the free content business is "pretty alien to Apple."
Hulu Plus' Value Lies in Its Support for Competing Hardware
Ever notice that iTunes doesn't exist on Android phones, Xbox 360s, Roku set-top boxes or any other non-PC devices that aren't made by Apple? The company uses its content services as a hook into its hardware, but that strategy is at odds with the Hulu Plus, which aims to support as many devices as possible. Surely, Apple wouldn't want to support subscription video on non-Apple devices, but if it pulled the plug on Hulu Plus for competing hardware, a lot of subscribers would jump ship.
How Valuable Are Those Content Deals, Anyway?
The main reason Apple would want Hulu is for its content. According to Bloomberg, any deal would include five years of programming with two years of exclusivity. But as any Hulu Plus subscriber will tell you, the current selection carries baggage. Not all shows from Hulu's free Website are available on Hulu Plus, and some shows that are available may only be viewed on a PC. That's all thanks to content providers who are afraid of online video replacing cable. Does Apple really want to pay billions for those headaches?