How a Hulu skinny bundle could succeed (and where it could falter)

Hulu wants to go toe-to-toe with Sling TV and PlayStation Vue, but is its ownership a blessing or a curse?

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Next year, Hulu will join the likes of Sling TV and PlayStation Vue with a streaming bundle of live TV channels.

While Hulu hasn’t said much about how the service will work, the price is rumored to be around $40 per month. Many channels will likely come from Hulu’s corporate backers, including Disney, Fox, and NBCUniversal.

What we’ve heard so far doesn’t sound much different from the “skinny bundles” that exist already. Still, Hulu’s existing service—and its ties to big TV networks—put the company in a unique position to replace the cable bundle. Here’s where a Hulu TV bundle could go right—and where it might go sideways.

Hulu has the reach

Hulu now has 12 million paid subscribers in the U.S., and while most of those users have cable already, either way Hulu can potentially sell millions of customers on a smaller bundle of streaming channels. (This assumes that instead of breaking live channels into a separate product, Hulu would make them part of the main app, where existing subscribers could see what they’re missing.)

Hulu has the apps

Today, Hulu is available on iOS, Android, Windows, web browsers, Amazon Fire TV, Android TV, Apple TV, Chromecast, Roku, Xbox 360, Xbox One, PlayStation 3, PlayStation 4, Wii, Wii U, and countless smart TVs and Blu-ray players.

No other skinny bundle has that kind of platform distribution. Sling TV is absent on Apple TV, PlayStation and Nintendo consoles, and smart TVs, while PlayStation Vue only works on Sony’s consoles, Fire TV, and Chromecast. Again, if we assume Hulu builds live channels into existing apps, it’ll immediately be able to reach users that its competitors aren’t.

Hulu has the power to reinvent TV

Because Hulu is owned by major media companies such as Fox and Disney, it has a unique ability to work with them on new ways to watch television.

Imagine, for instance, a system where scheduled programming was replaced by personalized playlists, and the DVR was rendered obsolete by robust on-demand catalogs. This may require some drastic changes to the way TV networks license their content, but Hulu’s backers have indicated that they’re willing to make changes. (“We’re positioning for success in this environment where it’s not worth making the distinction between linear and digital any more just as the walls between broadcast and cable melted away years ago,” 21st Century Fox CEO James Murdoch recently said.)

Depending on how far TV networks are willing to go, Hulu could help bring about the end of traditional channels, instead making it easier for users to watch exactly what they want on their own terms.

What could possibly go wrong with Hulu’s plan?

Hulu and its backers may still be hooked on antiquated viewing modes

The TV networks are talking about innovation, but they’re also opposing it. Just a couple weeks ago, TV networks argued against an FCC proposal to open up the cable-box market, claiming that they rely on scheduled programming and rigid channel guides to make money. Unless that was just posturing, it’s hard to believe Hulu will really do much to shake up the traditional TV-viewing experience.

Meanwhile, Hulu itself still likes the idea of releasing new episodes of its shows on a weekly basis, as it hopes to encourage water-cooler conversations even at the expense of binge-watching. This outdated approach to television could hurt Hulu’s ambitions in the long run as rivals Amazon and Netflix let people get hooked on new shows without artificial limitations.

TV networks’ bundle addiction is a liability

Big media companies like Fox and Disney are the reason cable bundles got so expensive to begin with. For years, these companies got away with stuffing as many channels as they could into your typical bundle, while demanding higher carriage fees that ultimately raise prices. And because streaming video wasn’t yet a viable alternative, cable and satellite lacked the incentive and wherewithal to say “no.”

With cord-cutting on the rise, those same media companies are now looking to control their destiny through a Hulu-based bundle. Will they be able to say “no” to themselves, and resist stuffing Hulu with too many channels that few people want to pay for? Perhaps not; the rumored $40 starting point for Hulu’s bundle is already on the high end as far as skinny bundles go.

Hulu itself is a wild card

In a previous column, I wrote about how Hulu’s motivations are always shifting at the behest of its owners. First Hulu was a source of free TV on the web, which got downplayed in favor of subscription-based TV shows on mobile devices and televisions, which is getting downplayed in favor of original programming, which may eventually get downplayed in favor of a big channel bundle. Hulu needs a long-term vision. Let’s hope the upcoming skinny bundle helps Hulu create the future of TV and not just chase after it.

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