Hulu Sells Off Its Service in Japan

-No Longer a Competitive, Global OTT Service

Hulu has said it is selling its streaming service in Japan to Nippon TV, an over-the-air TV network.

What a strange path Hulu has taken during its lifetime. Hulu was on a roll this time last year, with former CEO Jason Kilar at the helm of the TV OTT service, and determined to turn Hulu into an OTT service that would take on Netflix in the US and abroad.

In January 2013, Hulu was experiencing a faster growth rate in percentage terms than Netflix, though of course not in actual numbers; revenue was impressively at $695 million at the end of 2012, up 65% on the $400 million of 2011. That growth has continued domestically. Hulu reported 5 million paying subscribers in the US and $1 billion in revenue at the end of 2013. It’s clear its international service hasn’t done nearly as well.

It’s a sobering reflection on Hulu’s former path to OTT glory, which has been marred by its owners’ indecision about the service’s fate and purpose.

Hulu launched in Japan in 2011. Netflix had just launched in Latin America and Amazon had acquired the SVoD service Lovefilm in Europe. That left the Asias to Hulu. “We believe Japan is a vibrant market for premium video content distribution online, and are committed to our Japanese service for the long-term,” said Hulu’s international head, Johannes Larcher, at the time. Larcher stepped down from this position in May of 2013, amid the bidding auction.

“We’re on a mission to make the world’s premium content available to people all over the globe. Thanks to our hardworking Japan team, today we are one step closer to realizing this mission,” Hulu said on its site back in 2011. It had opened up an office in Japan and hired a whole team there. It looks like the office and team will still be in place, but Hulu’s owners are washing their hands of it. “Hulu will be licensing our brand and technology and will continue to provide services to the Japan business,” said CEO Mike Hopkins this week.

Hulu has kept mum on details of its Japan business. Last year, it said it quadrupled its content offering there during 2012. Today, the service is accessible to over 90 million Internet connected devices in the country, including Blu-ray players, gaming consoles, NTBs, smartphones and tablets, according to the company’s blog. It has 50 content partners, too, and some of that is local content.

Hulu never made public any actual subscriber numbers in Japan. All it had said was that was attracting paying subscribers to the Hulu service in Japan at triple the December 2011 rate – which isn’t saying much as it had only just launched in August 2011.

Amazon and iTunes are the other OTT services in Japan, along with its local OTT services. At launch, Hulu offered only a subscription service, for a surprising $20 per month, and it didn’t have any Japanese content to offer viewers. Instead, its streaming library included US TV shows from its network owners Disney, NBCUniversal and Fox, along with TV show giant Sony Pictures Television. The service also doesn’t have any ads.

We and others have speculated that Hulu failed to launch in any other markets as it wasn’t able to reach content licensing deals because of its advertising model.

Nippon TV said it will use Hulu as the online service of its terrestrial and linear TV offerings. “In addition to terrestrial broadcasting and [satellite] broadcasting, Nippon TV is looking forward to succeeding Hulu’s business as a new path to deliver content through the Internet,” said Yoshio Okubo, president of Nippon TV….


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