Apple is in early talks that may lead to an acquisition offer for Los Angeles-based Hulu, said the people, who weren’t authorized to speak publicly.
This is interesting. Apple could do a great job with an streaming video service, but I don’t quite understand why Apple would need Hulu to make it happen. The company already has a new $1 billion data center, relationships with the networks and movie studios, and the technology to make it all happen.
You are missing the big picture. Apple wouldn’t buy Hulu for the technology, they would buy it to shut it down because they are Apple’s competition.
Look what Apple did to LaLa. They bought it just to kill it.
I agree with @applextrent:disqus – it sounds like (if true) a play to suppress directly or preempt a competitor buying. 2c
I think the idea that Apple would buy a company to shut it down are too simplistic. Everything is way more complicated than that here in the 21st century.
Could be patents, could be MAUs, could be to drive the price up.
I don’t think Apple needs to shut down Hulu, if they wanted to take over the market, Apple could do it by reducing the price. One or two years of making loss on movie sales and rentals are well within their financial options.
My guess is they’d buy Hulu for the expertise, the IP, the user base and the negotiating power with the studios.
They didn’t do anything of the sort. I think you’re confusing LaLa the company with LaLa the streaming service. Apple bought the company for the IP and expertise, most of whom still work for Apple.
Clearly Apple was able to sell them on producing something bigger and better further down the line in order to convince them that shutting down the *service* was a short term hit worth taking.
They bought them for their staff. Can you imagine Apple living with Lala’s website? (I was an early adopter of Lala, have the t-shirt. Literally.)
Your comments merely backs my point. Apple did not buy LaLa because they wanted to continue to run their service, they bought them because they were competition. Keeping the IP, and talent means they now work for Apple and are no longer competing with Apple. Meanwhile, Apple has already announced their “cloud” iTunes solution and it is nothing like LaLa.
Business is business regardless of technology, or what the year is.
The only thing Hulu has of any value is exclusive streaming contracts with major media conglomerates such as NBC, CBS, and Fox. Even so, Steve Jobs is on the board of directors at Disney which owns the likes of ABC, ESPN, etc. Apple already has negotiating power with the studios.
Hulu is Apple’s competition, and if Apple buys them for their exclusivity contracts then Apple will pretty much be in full control of purchasable TV content on the internet.
Just because one action causes another doesn’t necessarily mean that it was the reason to do it.
Prior to their acquisition I didn’t know LaLa existed, which tells you something about their greater popularity. I just don’t see Apple buying them just to shut them down, this is not how Apple invest, past purchases underline this argument.
How do you know this? Maybe there is more under Hulu’s metaphorical hood that we don’t know about.
There’s a reason why I mentioned the negotiating power last; these contracts are re-negotiated year after year, which means that if the studios don’t like what’s happening in the industry —namely Apple becoming even more powerful than it already is— they might block Apple’s initiatives.
The next problem is market dominance; I don’t see the government approving of a monopoly in this area.
Just because you had never heard of them before Apple bought them does not negate the fact they were possibly the largest streaming music website on the internet at the time.
I’ve been following Apple for 20 years, and yes they absolutely do have a pattern of buying companies just to shut them down, leach their talent, and IP. In fact, that’s pretty much all Apple does when they buy a company out.
I agree with your first point, I’m not omniscient.
What irks me about your second point, is that it implies a certain degree of malintent from Apple.
I’m not negating the possibility of it, I’m just saying that in many cases, they simply bought smaller companies for what they had to offer in terms of IP and talent, not to merely shut them down.
Hulu was founded as an initiative between NBC and Fox to create an online streaming platform to monetize TV content on the internet. It was basically a big experiment for the studios to figure out if they could make money through advertising online, and compete with the likes of Google and Apple. I know this because I use to work in the online video space from 2006-2008 and helped launch LiveVideo.com (which is now defunct but back in 06/07 had a chance to thwart YouTube before it got bought out by Google).
With all of this said, Hulu uses Flash, which Apple hates, and it is not like Apple doesn’t know how to stream video content. They already are one of the largest video content distribution companies on the internet (iTunes, AppleTV). While their streaming offerings are limited, they now have a new data center to stream as much video as they like with minimal overhead. I highly doubt there is any technology that Hulu possesses that Apple doesn’t already have, the only thing Apple doesn’t have is the streaming rights with the networks, and even if they terminate their deals after Apple buys Hulu out Apple still wins because Hulu is now dead, and there is now no competition for iTunes and Apple’s future streaming service other than Netflix.
Apple is a business just like any other, they have awesome products, but that doesn’t mean they aren’t capable of doing things that aren’t in consumers best interests if it means more business and money for them in the future.
Exactly, yet while business decisions often have influence on the market landscape, they don’t always have the intern of crippling the competition.
You say you’ve been following Apple for 20 years. I’ve been following them for almost 35, having designed cards for the Apple II. Does that make me more informed than you? No.
Apple is not anything like it was then. The marketplace, especially mobile, follows new rules and nothing is simple anymore. It’s all very complex now. Oversimplification is the biggest problem in understanding the tech space, with people still citing financials, unit sales, and single market share numbers (there are now 9 market share measurements for the iPhone) and simple measures and principles have become more and more meaningless. Heck, this site even said an Apple branded TV might be in the works, and anyone with detailed knowledge of pursuing such a thing knows that it’s a hornet’s nest that Apple wouldn’t likely attempt to detangle. It’s complicated.
Your statement that business is business, is true, but meaningless, right? It didn’t help anyone understand anything more clearly or accurately by saying that.
Commenters paint a much more accurate and complex picture of what’s really in play than the article they’re commenting on usually do. Case in point here.
I agree that you show sufficient confirmation bias to think that what I said just validated your opinion, but that doesn’t make it so.
Just because the existing product line of a company doesn’t make it through to the other side of an acquisition, doesn’t mean the acquiring company was acting solely with intent to squash competition. Not everyone is Microsoft. Just a few examples:Apple bought Fingerworks. None of Fingerworks’s products continued after the acquisition, but the technology and expertise that was gained now permeates throughout Apple. Do you think Fingerworks was bought just for competitive malice?Apple bought Emagic. Logic *did* continue (albeit on the Mac only) and the product expertise gained also trickled down to lots of other areas in the company.Apple bought Final Cut (previously KeyGrip) and the team behind it. Ok, not strictly a company, but the product lived on and Apple gained Randy Ubillos and the expertise to gain a large portion of the non-linear editing market, as well as introduce products like iMovie. Do you see a pattern here yet?Apple bought LaLa to strengthen their iTunes cloud offering. Just because LaLa the product ceased to exist, does not mean that Apple bought the company to simply shut them down for competitive purposes.To claim otherwise is fallacious logic.
Care to provide some examples of this pattern of buying companies just to shut them down?
I’ve given examples in a comment above that back my assertion that Apple does not buy companies to shut them down.
Almost none of what you just said has any relevance to what is being discussed. Just because a company has the capacity to act in a certain way, does not translate into them actually acting in that way. You should familiarise yourself with Occam’s razor.