Hulu Makes First Global Stop in Japan, China Next?

And the winner is … Japan. That’s the word coming from Hulu, the popular video streaming site backed by 3 top Hollywood studios, which has just announced that Japan will be the first stop in its international expansion. (company announcement) The fact that China wasn’t chosen isn’t all that surprising, as Japan and most of Western Europe boast far wealthier consumers to buy the mostly paid programming services offered by Hulu, whose primary backers include Disney (NYSE: DIS), News Corp (Nasdaq: NWS) and Comcast’s (Nasdaq: CMCSA) NBC Universal. But what’s interesting for China watchers is the language towards the bottom of the announcement, where Hulu describes itself as a company with offices in “Los Angeles, New York, Chicago, Seattle, Tokyo and Beijing.” That’s the exact wording, with Tokyo and Beijing listed as Hulu’s only offices outside the US, in that order. Does that mean that China will be the next stop on Hulu’s global expansion? I would say there’s a good chance the answer is “yes”, given the recent flurry of Hollywood deals to provide content to the growing number of Chinese video and music sites under growing pressure from Beijing to delete illegal content and offer legal material instead. Top online video site Youku (NYSE: YOKU) has been a leader in the recent trend, signing deals with Warner Brothers (NYSE: TWX) and Philips Electronics (Amsterdam: PHG) (previous post), while leading search site Baidu (Nasdaq: BIDU) also recently signed a deal with several major record labels to offer legal copies of their music. (previous post) The timing also looks particularly good for Hulu, as it could offer its programs not only over the Internet, but also potentially over a state-of-the-art digital home cable network being rolled out soon by China Telecom (HKEx: 728; NYSE: CHA) or via a future similar network being created through an ongoing national cable TV consolidation plan. If the Japan roll-out goes smoothly, I’d look for a Hulu announcement in China possibly as early as the end of this year, but more likely in 2012.

Bottom line: Hulu’s move to Japan presages a move into China for the second stop on its global expansion, most likely in 2012.

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