Hulu can’t win for winning

Over-The-Top Video Hulu president Jason Kilar made his boldest pitch yet for an IPO at the NewTeeVee Live conference Wednesday, even as he officially declined to comment on plans for an IPO. For the first time, Kilar revealed official revenue figures for the web TV portal – a projected $240 million for 2010, up from $108 million last year – along with results from research into Hulu’s effectiveness and efficiency as an advertising platform (basically, it rocks).

At the same time, Hulu seems to have found a way to thread the over-the-top needle by striking deals to put its Hulu Plus app on a growing number of network-enabled devices in the living room. Kilar was barely off the stage at NewTeeVee Live when news broke of a deal to add Hulu Plus to the Boxee Box, marking a symbolic turning point in the battle over streaming TV content directly to the TV screen. Last year, Hulu famously blocked Boxee’s free video browser from accessing the site over concerns from its parent companies that allowing Internet-delivered TV to reach the TV would undermine their relationships with cable and satellite providers.

The deal to enable the subscription-only Hulu Plus service on the Boxee Box comes on the heels of similar deals struck by Hulu with Sony, for the PlayStation 3, with Roku and with Microsoft, for the Xbox 360.

Altogether, it was pretty hard to miss Kilar’s point: Hulu’s revenue is growing rapidly, advertisers love it and peace is breaking out on the set-top. The IPO should be good to go.

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Except that it still probably isn’t, not because of any failure on the part of Kilar and his team, who deserve great credit for building Hulu into both a very good service and a genuine business, but because the networks that currently own it haven’t yet figure out their own long-term strategies for online and over-the-top video. And until they do, they’re likely to see maintaining direct control over the strategic direction of Hulu as critical.

As it is, the networks are still using online delivery as a stalking horse in their negotiations with cable MSOs over retransmission fees, as was evident in the latest showdown between Fox and Cablevision. While that dispute was going on, Fox was the only one of the four major broadcast networks that was not blocking Google TV from accessing its online streaming content. As I predicted at the time, however, that would probably change as soon as Fox had squeezed what it wanted out of Cablevision and no longer needed to posture on embracing over-the-top delivery.

Sure enough, just days after it settled its dispute with Cablevision Fox started blocking Google TV.

You can call that cynicism on the part of Fox, or simply aggressive negotiating. But whatever you call it, to me it doesn’t add up to Fox ( or any of  the other networks for that matter) being ready simply to sign a long-term licensing deal with Hulu and say “via con dios.”

Even if the networks were to accept a spin-off, moreover, they would probably want to keep Hulu on a short licensing leash to preserve their flexibility to shift strategies quickly. That should give pause to would-be Hulu underwriters and investors because it saddles the service with a high degree of strategic uncertainty.

As good as the numbers look today, you would still be betting on someone else’s stalking horse.

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