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Verizon to Hulu: You’ll be dead in two years, anyway

Media giants always underestimate the upstarts, but it doesn’t mean they are right.

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So I guess Verizon CEO Ivan Seidenberg isn’t a Hulu fan, huh?

"When you think of the change, look at Hulu and the dialogue and debate, and you say, ‘O.K. this is in for the next eight to 12 months and in two years it won't matter because the world will have moved on.’"

That’s Seidenberg talking about upstart video site Hulu in a speech last week, as reported by Broadcasting and Cable.

On the one hand, Seidenberg is probably correct. In two years, the world will have moved on from Hulu, which, while its rapid-fire growth has slowed of late, nonetheless is by most measures the Web’s third-largest video site.

Very soon, Hulu’s big innovation of figuring out how to (mostly) painlessly inject seamless video advertising into long-form videos such as TV shows or movies will seem quaint, as more targeted, customized and just plain interesting video advertising options emerge.

But who’s to say Hulu — or some other new rival — won’t have introduced the next big thing by that time, as well?

The challenge for large media companies — and Verizon with its FiOS service now sits squarely in that camp — is whether they can keep up as smaller competitors innovate away at the next new thing. The real problem for incumbents is that such upstarts can be incredibly disruptive to the status quo without really having any chance to survive and thrive as an independent company.

In the end, though, it doesn’t matter if Hulu — or Roku or any other video start-up — actually survives. What matters is whether the innovations they introduce stick and how those innovations change, or in some cases shatter, the industry status quo.

Perhaps even scarier is whether or not true innovators get bought up by larger competitors. It’s easy to laugh off a Silicon Valley start-up. It’s not so easy when they get acquired by Google or Cisco or some other giant and become the status quo.

So Verizon can laugh off Hulu today. But can it afford to ignore any competitor, large or small, that has the nothing-to-lose power to not only shake up the market dynamics, but also fundamentally alter user behavior and expectations?

Only at its own peril.

E-mail me at richard.karpinski@penton.com.

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© 2014 Penton Media Inc.

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