As Hulu gets increasingly squeezed by content and rights owners, details emerging bode badly for its long touted IPO.
The problem is, Hulu, at the moment, owns very little. It cannot afford to bid top dollar against the major broadcasters and networks for prime content. Not, indeed, can its largely advertising driven model support the kind of revenues Netflix can achieve.
The rights 'layer' is a highly complex and often ignored part of the video value chain, but this is where the key to the valuations of the next generation of content will lie.
In the UK, SeeSaw was on the verge of being closed down before it was acquired by Beebo buyers Criterion as a distress play. SeeSaw suffered from a similar problem.
The key formula for these companies is simple:
(Ad revenue + Subs rev + Vod rev) - (Cost of customer acquisition + Cost of rights + Distribution costs)
But within this are highly complex deals, often involving residual payments to artists, musicians and producers.
So, determining the value of Hulu against, say Comcast or even Sky (which is currently in play, of course), is next to impossible, since its rights situation will vary almost by the minute.
That leaves it as a brand with an audience, fulfilling one reasonably narrow task - the delivery of aggregated video to a portal and very susceptible to its ability to continue acquiring rights windows that work for its audiences as broadcaster look increasingly to promote their own 'tv everywhere' strategies.