Hulu is killing it. Surprised? You shouldn’t be. Since Hulu first helped broadcast programming escape the prison of the TV set five years ago, the Los Angeles-based venture has been on a tear. In fact, it’s managed to hammer out licensing deals and lure paying subscribers at a faster clip than any other video subscription service in the U.S.
Hulu now offers programming — ranging from NBC sitcoms to Criterion Collection art house flicks — from more than 380 content providers. It has distribution agreements with the likes of AOL (AOL), MSN, Yahoo (YHOO), and major cable companies, which all use its player to stream video. As part of a half-billion-dollar pledge to add more content this year, Hulu even coaxed Larry King back under the klieg lights to host an online-only show, which began in July.
All of that translates into impressive figures: Hulu’s revenue soared to $420 million in 2011, up 60% over 2010. It had more than 2 million paying subscribers in the latest quarter, up a third from the end of last year. In May it even managed to rank second behind Google’s YouTube for total number of videos streamed online, according to ComScore. And when it came to advertisements, Hulu was No. 1, streaming 1.67 billion video ads that month alone.
Hulu’s owners should be crowing about their spectacular success. Instead, they are bickering bitterly, casting the firm’s future into doubt. TV is changing faster than at any time since the introduction of cable. Hulu’s predicament shows just how knotted things have become for media companies trying to profit online.
Hulu’s issues begin with its complex ownership. The joint venture counts Disney (DIS), News Corp. (NWS), and Comcast’s NBCUniversal among its owners. Competing interests have hurt: A proposed 2010 initial public offering never materialized, and a potential sale last summer fizzled. Both failed in part because Hulu’s owners want to maintain control over the licensing of their content. They also want to ensure that their creation doesn’t begin to cannibalize conventional TV ad revenue…
Read more: Fortune