Is Hulu Changing Its Distribution Strategy?

Earlier this week, Hulu announced decisions to pull out of TV.com and Boxee. According to sources close to the company, Hulu’s managers were motivated by very different reasons in each case. Regardless of the reasons, these announcements deliver a blow to online video. Another potential blow came yesterday when we heard how cable companies are fighting to limit online content.

Hulu has more than 100 content providers, but some don’t want their content on Hulu. In the case of Boxee, Hulu executives asked Boxee to remove content because some content partners (possibly NBC Universal and News Corp.) didn’t want their material to appear on the service. If the film studios and TV networks also pull out, it will make it more difficult for those of us who love online content to acquire shows and films online.

It doesn’t appear that the battle is solely against online video, however. What’s interesting about this is that News Corp. and NBC Universal handed Netflix an advantage over Hulu in the streaming video market: Just as Netflix is branching out to Xbox, the Roku Player, and LG televisions, Hulu is shrinking its distribution.

Could it be that the big cable companies are pressuring TV networks and film studios to scale back the content they provide Web services? Peter Kafka from All Things Digital certainly thinks so. Although it’s purely speculation, it’s believable, especially given the financial incentive  cable networks and operators have to preserve the current cable TV business model. In fact, Glenn Britt, CEO of Time Warner Cable blamed part of the company’s $8.16 billion loss in the fourth quarter on Web video services, which have been luring customers away from cable companies.

Some people in the tech sector are speculating that Hulu might be scaling back the number of sites in order to take advantage of a walled-garden approach. At this point, it’s hard to say, but it’s worth noting that many other outlets, including Yahoo! and MSN continue to offer Hulu’s movies and shows. So where will Hulu go from here? And what will happen to the future of online video? These are just some of the questions that we’re left to ponder.