Hulu's owners are bickering among themselves and the company's management over how much free content the online video service should offer, according to a published report.
The dispute is over how much Hulu's ad-supported service is competing with traditional TV broadcasts, according to The Wall Street Journal. Hulu is owned by three media conglomerates that operate their own broadcast networks: Disney (ABC), News Corp. (Fox), and NBC Universal.
Fox and ABC have considered pulling from the service some of their content offered to Hulu users free of charge, the Journal reported, citing anonymous sources. In what may be good news for Netflix, Apple, and other Web TV services, Hulu's backers may also offer the company's competitors more of their content, according to the report.
Hulu could try to transform itself into something that looks more like a cable company, according to the newspaper. "Hulu as an online cable operator would use the Web to send live TV channels and video-on-demand content to subscribers," the Journal wrote.
Friction among Hulu's owners and also between them and company managers over the direction of the service has been building for a long time. Reports surfaced over the past year that some Hulu partners were unhappy with their returns from Hulu and there were disagreements about who would sell ads for the some of the content on the service.
Hulu was a pioneer. Up until, online video entertainment was all about YouTube and user-generated content. Hulu's site proved that traditional media companies could build their own and that big audiences would watch full-length hit TV shows delivered over the Web.
Some pundits said Hulu was the first service to truly compete with illegal file sharing.
But now there are alternative Web distributors for the networks to work with, the dominant one being Netflix. The company pays cash to license content, and yesterday reported that it now has. Netflix managers have announced that acquiring rights to TV shows is their priority and that the company has money to spend.
The question some of Hulu's backers may be asking themselves has to be this: is the ad-supported service really necessary anymore?