Disney and Hulu agree to content deal

by Dan Leahul, Brand Republic 01-May-09, 10:35

LONDON - Disney has struck a content deal with online video website Hulu in exchange for a 25% stake in the company, joining equity holders News Corporation, NBC Universal and Providence Equity Partners on the Hulu board.

The agreement sees popular Disney programming from its ABC network streamed for free on Hulu, including episodes of 'Grey's Anatomy', 'Desperate Housewives' and 'Lost'.

Disney said it paid a "modest sum" for the deal, which differs from Hulu's previous agreements with NBC and News Corp, and allows Disney to control how many episodes are aired on the third party site.

It is understood that Disney plans to use Hulu as a "teaser" site, airing a select number of episodes to lure viewers to its main ABC website for the full programming line-up.

Hulu is currently the third most popular online video site, inching up to number three.

YouTube still reigns supreme among online video sites, accounting for 41% of the market.

Fox Interactive Media in second at 3% and Hulu at 2.6%.

The popularity of YouTube rivals has increased as advertisers remain wary about associating their brands with YouTube's unpredictable content.

Hulu's popularity is only expected to grow, and analysts believe that Disney could no longer afford not to be included.

With Disney's inclusion Hulu will receive a further boon allowing it to air established ABC programming such as 'Ugly Betty', 'Scrubs' and 'Who Wants to be a Millionaire'.

The Disney deal leaves CBS as the only major US broadcaster not to share its programming with Hulu. Instead, CBS threw its content behind TV.com, which it acquired from CNET in 2008.

The deal raises questions for Apple and its iTunes pay-per-view business model, as analysts predict web users will continue to flock to Hulu for free programming in exchange for 30-second ad spots.

Pressure will also be placed squarely on Google, which is seeing increased demand to provide quality programming on its online video site YouTube in order to attract advertising revenue.