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Hulu: An Evil plot to Destroy the World Essay

All quotations and references refer to “ Hulu: An Evil plot to Destroy the World” unless otherwise noted. 1) Hulu succeeded while everyone predicted its failure due to the following reasons:

* Hulu harnessed existing technologies namely online video and broadcast media to create a new platform that was “focused on helping users find and enjoy the world’s premium, professionally produced content when where and how they want it”. The platform brought together professional content owners/providers, advertisers and content consumers/users in a platform mediated network. * Rather than choose to be a destination site or syndicate content, Hulu chose to be both by being an aggregator of online video. There were web sites that did this for user generated content but Hulu was a leader in this space for professionally generated content.

* The business model for Hulu’s platform is 100% advertising supported. * Hulu’s platform model consists of 3 nodes – content providers, advertisers and users * The ‘subsidy side’ in this network is the users who use the platform for free while the ‘money side’ is the advertisers who pay Hulu for running their advertisements. Hulu on the other hand pays content providers for showing their content on the platform. The more the number of users on Hulu the more advertisers value the platform and are attracted to advertise on it. Also, the more the content available on Hulu the more users are attracted to the platform and subsequently, the more the revenue that can be generated from advertising.

* Hulu leveraged the cross side network effect between content providers and users by partnering strategically with over 170 content providers including the most popular broadcast and cable networks in the United States. The content providers “participated in the value created through the distribution of their content”, providing the incentive for them to continue their support of the Hulu platform. * Hulu partnered with 30 affiliated websites including those whose users represented 96% of the monthly unique US-based web users to bring content to its audience and to leverage the cross side network effect between users and advertisers to increase revenues. * Hulu also focused on users and offered its service free to them thereby maximising the cross-side network effects between users and advertisers on its platform resulting in increased revenues generated from advertisers.

2) Hulu’s business strategy is to be focused “on helping users find and enjoy the world’s premium professionally produced content when, where and how they want it”. Hulu does this by using Internet technology to bring free content to its users anywhere at any time. Hulu is a first mover in this space and is currently enjoying the first mover advantage. However with the ubiquity of internet technology accompanied by lower costs and the commoditization of the technology, the barrier to entry will be reduced and more players will be attracted to the profitable online video business, eating into Hulu’s profitability and success. Also, the increase in IT investments in the internet age causes “a Winner-take-all dynamic and high turbulence, as each group of dominant innovators is threatened by succeeding waves of innovation” (McAfee and Brynjolfsson, 2008) in Schumpeterian competition. This makes Hulu’s success vulnerable.

The case mentions that there is already an emergence of competitive threat from “TV Everywhere” and even though CEO, Jason Kilar discounts the effect on Hulu, the new entrant is gaining some clout and Broadcasting & Cable has warned that ” TV Everywhere was “starting to look like a real competitor to Hulu.””

Sustained success for Hulu in what is bound to be an increasingly competitive market will depend on Hulu’s Management and their ability to continue to maintain frugality, drive innovation, operational efficiencies and differentiate their products and services to gain competitive advantage and continue to dominate the market.

3) Input data –
Basic – Name, Gender, Age, marital status
Contact – address (state, city, zip code), phone number
Other- favourite genre, previous shows watched, sites visited previously, ratings of previous shows watched.
a) BI techniques
i) Using Market basket Analysis
Rule: if {Gender = female} then {watches real estate shows} Action: Show Ad Selector for real estate companies and related products when a female user
is on Hulu ii) Using Market basket Analysis

Rule: if {Married and Age>50 and lives in California} then {has watched >2 court shows in the past and previously visited a tax filing website} Action: Approach tax filing website to place their advertisement on Hulu when court shows are playing. iii) Using user based Collaborative filtering

Rule: Find users ‘similar’ to current user by choosing those with the highest similarity coefficient between them and this user on the ratings of other shows. Use a combination of their similarity coefficients to predict current user’s rating for a crime show. Action: if user’s predicted rating for the crime show is high, then advertise any new crime show when user is on Hulu or other affiliate websites. b) Monetization

These techniques allow Hulu to increase the click through rates as well as transaction conversion rates for its advertisements because they are targeted at users most likely to respond. Since advertisers are interested in traffic, Hulu can increase revenues by demonstrating to advertisers the number of users that can be targeted using these techniques and the subsequent increase in click through and conversion rates.

4) IT Security Plan for Hulu
a) People
* Management should make security a high priority and include it in Hulu’s business strategy * Train Hulu employees on the importance of security-keeping passwords confidential and not sharing passwords * Train employees on privacy policies

b) Processes
* Create security policies and procedures establishing mandatory minimum security standards * Standards should include provisions on customer privacy * Ensure all affiliate websites adhere to mandatory minimum security standards * Set procedures for security incidents

* Review security policies annually to address new security threats to the online video industry
c) Technology
* Encrypt all customer data
* Install antivirus software on all servers and computers and keep installations up to date
* Have multi-site backup of data
* Install monitoring software for servers and network
* Incorporate systems logging to track access to Hulu’s IT infrastructure
* Ensure firewalls are installed, enabled and have sufficient filters to protect from outside intrusion
* Engage ‘Ethical Hacking’ vendors to audit systems annually in order to identify areas of vulnerability.

References
Andrew McAfee &Erik Brynjolfsson (July-August 2008). What Makes a competitive difference. Harvard Business Review, pg 100.


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