Hulu and TV Networks Are Stirring Trouble for Netflix

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A distribution deal between Hulu — co-owned by NBCUniversal (NASDAQ:CMCSA), Fox (NASDAQ:NWSA), and NBC (NYSE:ABC) — Fremantle Media was officially announced Sunday night. Shows produced by Hulu will find their way onto TV networks in the U.K., establishing the site as a testbed for new TV content. Under the agreement, Fremantle will be able to distribute Hulu TV shows worldwide except for in the U.S. and Japan, where Hulu has its own services.

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In recent weeks, Hulu has expanded  its original content line-up, which also coincides with Netflix’s (NASDAQ:NFLX) plans to begin spending heavily on original content. While Netflix is trying to compete with TV networks like HBO by buying shows, Hulu is trying to make TV content that works with TV networks rather than against them. In February, Hulu launched its own scripted show Battleground, and will be premiering a travel series called Up to Speed this summer.

Hulu is looking to make its site a testbed for shows to be picked up by traditional TV networks. Last summer, Hulu secured exclusive rights to a dark superhero comedy, Misfits, which became the most-viewed show on the site for several consecutive weeks. Hulu plays a huge role in the success of TV shows and adapts shows for U.S. audiences. The site has also recently secured the rights to Morgan Spurlock’s documentary A Day in the Life, which Fremantle will distribute and air exclusively. Hulu’s decision to work with TV networks, rather than against them, while still pioneering content could certainly mean trouble for Netflix.

Hulu is looking to control its own services  running in the U.S. and Japan, and is strategically using TV networks to branch out to the rest of the world. Hulu is aware of its potential to generate huge revenue in markets where it does not have an online presence. The revenue that Hulu generates can be funneled back into the production of original content to generate more revenue — a cycle that Hulu is looking to continue.

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To contact the reporter on this story: Diallah Haidar at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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