About a decade ago, it was extremely common for an Internet company with a largely unknown future to obtain hundreds of millions or even billions of dollars through an initial public offering. But since the tech bubble popped, dotcom IPOs haven't been relatively rare. That's why Hulu's upcoming IPO will be so interesting to watch. It may provide the kind of excitement that gripped investors back in the late 1990s, when young promising Internet companies sought funding. But a similar level of risk might also be present.
The big obstacle standing in the way of Hulu is finding a way to make the pay model work. This is a struggle well-known to journalism. But for Hulu it may be an even more difficult demon to conquer: at least newspapers and magazines have exclusive content for which someone may be willing to pay. Hulu, however, has to compete with cable, satellite, and broadband TV that offers the same shows and more.
In a world without those competitors happily pedaling digital video recorders (DVRs), Hulu might have a pretty good shot at making a lot of money. Anyone who misses a TV show or wants to watch more than one show at a time would have few other options, unless they would rather tangle with VHS tapes. But that's not the world we live in. DVR service can be as cheap as $6 more per month than digital TV service without it. So anyone with cable or a similar service will almost certainly find it cheaper to take that route, unless Hulu manages to find a way to make money by charging even less. That is, unless these customers are willing to give up their cable or similar service entirely.