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Hulu IPO: What It Would Mean for Netflix

Hulu may be preparing itself for an IPO. How will it affect Netflix?



) -- As


potentially prepares itself for an initial public offer, what does this mean for


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Hulu, the online site for streaming television and movies, intends to go public with an offering that could rake in $2 billion, according to the

New York Times

, which cited sources briefed on the matter.

Hulu was launched three years ago as a joint venture between

News Corp.

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Walt Disney

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NBC Universal

and private-equity group

Providence Equity Partners

, but it wasn't until recently that the site began posing a threat to Netflix.

Last month the company announced Hulu Plus, a $9.99 per month service that will provide users with streaming content of some of their favorite TV shows like



Modern Family


This raised a red flag regarding Netflix's subscriber base and what will happen to the company once it taps out its pool of potential users.

But this worry, at least for now, may be unfounded, as Hulu Plus costs $1 more than Netflix's basic package, and its offerings are limited, with no content from CBS, HBO, Showtime, ESPN, TNT and other networks.

Netflix, itself, has been working on building its own content, and last week announced a deal with EPIX, a joint venture between


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Metro-Goldwyn-Mayer Studios


Lions Gate Entertainment


that could add up to 20,000 new titles to Netflix's streaming content.

As for a Hulu IPO, the concern is limited. "Hulu hasn't had trouble accessing capital, and the IPO would most likely merely allow founders to sell some shares, so I don't see it as making Hulu any more competitive," says Wedbush analyst Michael Pachter.

"The Street seems to think that consumers have an insatiable desire to pay more for TV and movie content," Pachter continues. "I think that while there is a reasonable premium warranted for convenience and selection, there is a limit to what people will pay, and the end game may be zero sum."

-- Reported by Jeanine Poggi in New York.


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