Why Netflix, HBO, And Amazon Owe Their Success To Hulu

Ten years of innovation, lesson No. 3: You can’t—and shouldn’t—go it alone.

Why Netflix, HBO, And Amazon Owe Their Success To Hulu
[Source Photos: Unbreakable Kimmy Schmidt: courtesy of Netflix; The Sopranos: courtesy of HBO; Transparent: courtesy of Amazon Studios]

Remember when Netflix was a DVD-by-mail service? And its chief rival was the brick-and-mortar outlet Blockbuster? Feels like an eternity ago. Now Netflix looks over its shoulder at HBO on one side and Amazon on the other. But it was the breakthroughs generated by the less-praised and underappreciated Hulu that pointed the way to all of their success.

Fast Company put Hulu on the cover of our second World’s Most Innovative Companies issue in 2009. That decision was not a dig at Netflix or a mark of suspicion about its business. (Reed Hastings of Netflix had been a cover subject three years earlier.) Rather, it was a reflection of game-changing steps that Hulu was taking. At that time, Hulu was run by former Amazon executive Jason Kilar, who had to manage an assortment of owners—including both Fox and NBC—that had yet to embrace the idea of streaming their content. While Kilar had access to a rich trove of TV shows, he faced an ownership structure that was internally divided. For several of his many-headed bosses, the prospect of Hulu was at best a test, and at worst a threat to their core operation.

Kilar’s tactic was to play these owners off against each other just enough to keep them at bay, while he and his team furiously worked to create a new kind of viewing experience. Suddenly, streaming TV and even movies was easy, fun–and legal. At that point, the model was ad-supported in a user-friendly way that still hasn’t been replicated: Viewers could choose which ads they wanted to see, increasing the value for advertisers by constructing a qualified audience.

Eventually, Hulu’s corporate structure—not to mention the rise of streaming elsewhere, among its owners and most notably via Netflix—put the company on its heels and Kilar out of a job. But the user experience, design, and mass-market acceptance of streaming were all created or accelerated by Hulu. The most common narrative of innovation success often follows a single disruptor—Steve Jobs, Phil Knight, Mark Zuckerberg—without appreciating how much rests on the shoulders of progenitors and peers who advanced the game.

Today, of course, we expect to be able to stream everything via apps. (Back in 2008, most viewing happened on a desktop computer via the web browser.) Hulu is among a constellation of providers continuing to advance a revolution whose ultimate outcome is still unclear. Hulu hasn’t reaped the lion’s share of the rewards from its early innovations, but that doesn’t mean it didn’t have a powerful impact. And it continues to play a role in pressing Netflix, HBO, and others to keep advancing.

This article is part of our coverage of the World’s Most Innovative Companies of 2017.

About the author

Robert Safian is editor and managing director of the award-winning monthly business magazine Fast Company. He oversees all editorial operations, in print and online, and plays a key role in guiding the magazine's advertising, marketing, and circulation efforts.