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Report: Hulu Developing Virtual MVPD Service  

Aims to launch OTT-TV service in Q2 2017, 'The Wall Street Journal' says (Updated) 5/01/2016 10:45 PM Eastern Last updated at 5/02/2016 3:55 PM

Hulu is looking to expand beyond SVOD with an over-the-top, virtual MVPD offering that would bundle feeds from popular broadcast TV and cable channels, The Wall Street Journal reported Sunday.

 

Hulu is eyeing a Q1 2017 launch, with co-owners The Walt Disney Company and 21st Century Fox closing in on distribution deals for Hulu’s developing service, according to the report. ABC, ESPN,  Disney Channel, Fox’s broadcast network, Fox News, FX and its Fox’s national and regional sports channels are among the offerings that could be part of a package, the WSJ said, noting that Comcast-owned NBCUniversal has not yet agreed to license programming for the planned OTT-TV service.  Hulu is owned by 21st Century Fox, Disney and NBCU.

 

Update: NBCU is actively negotiating with Hulu as part of the new product the OTT provider is developing, a person familiar with the negotiations said, noting that Hulu has only recently approached NBCU about the service that it has in mind. 

 

Sanford C. Bernstein analyst Todd Juenger speculated last month that Hulu could be working on a skinny TV offering that could be delivered over-the-top and fetch about $40 per month. “The appeal of Skinny Hulu, we suppose, would be: if skinny bundles are gaining popularity, the major network owners should take their product directly to consumers, capture the opportunity (and the margin, and the asset value) themselves, and ensure their networks are part of the theoretically) most widely distributed skinny bundle offering. Leave the nonsense networks out," Juenger wrote in a note issued on April 22. 

 

If Hulu’s purported plan is successful, it would join a growing mix of virtual MVPD providers that include Sony PlayStation Vue, Dish Network’s Sling TV, as well as offerings such as fuboTV, a “sports-first” service that has more than 50,000 subscribers.  AT&T, meanwhile, is working on a set of DirecTV-branded OTT services, including DirecTV Now, a service that will be a close cousin to the packages offered via the traditional satellite TV service. Amazon and Apple are among others that reportedly have been eyeing OTT-TV services.

 

Word of Hulu’s interest in expanding beyond an SVOD service that competes with Netflix and Amazon Prime and a new stand-alone Amazon subscription streaming service would also rise amid an expanding number of standalone OTT offerings from CBS, HBO, Showtime and, most recently, Starz.

 

Though Comcast has corporate ties to Hulu, a pay TV bundle from the online video specialist could apply pressure on cable operators and telco TV providers to assemble services that can be delivered outside their traditional footprints.  

 

Speaking on last week’s earnings call, Comcast Cable president and CEO Neil Smit said there’s no reason why Comcast couldn’t offer an out-of-footprint OTT service, once it had the distribution rights to do so, but said the economics don’t add up.  “We, thus far, haven't seen an OTT model that really hunts,” Smit said.  “But we'll continue to stay tuned into the market and be prepared to respond accordingly." 

 

Hulu was not immediately available for comment Sunday, but WSJ speculates that the service Hulu has in mind could run about $40 per month and possibly include a cloud DVR.

 

A multichannel service from Hulu would seemingly compete with other pay TV offerings. Hulu, however, has been cozying up with MVPDs with its SVOD service. Last month, Cablevision Systems was the first MVPD to distribute Hulu to pay TV customers. AT&T, Armstrong, Atlantic Broadband, Mediacom Communications, Midcontinent Communications and WideOpenWest (WOW!) also have deals in place to distribute Hulu.

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