Wednesday, June 30, 2010

Sony's PlayStation Network Said to Be Near Deal for Hulu's Paid TV Service


Sony Corp. is close to an agreement to carry a paid TV service from Hulu LLC, operator of the second-largest video website, on its PlayStation 3 game console, two people with knowledge of the talks said.

The partnership could be announced as soon as next week, according to the people, who asked not to be identified because the arrangement hasn’t been made public.

Access to video-game consoles would give Hulu’s planned pay service a bigger audience and more revenue by making its Internet programming more widely available on television sets. Hulu also is in talks with CBS Corp., Viacom Inc. and Time Warner Inc. to add their TV shows to the website’s subscription service, people with direct knowledge of the discussions said.

PlayStation 3 owners registered for the console’s free Web service, the PlayStation Network, would be able to subscribe to a Hulu service that provides on-demand access to current and past seasons of prime-time TV shows from NBC, Fox and ABC, the people said. Hulu also is in talks to put its $9.95 a month service on Microsoft Corp.’s Xbox, Reuters reported previously.

Patrick Seybold, a spokesman for Sony’s PlayStation Network in Foster City, California, declined to comment on a possible agreement, as did Christina Lee, a spokeswoman for closely held Hulu. Worldwide, the PlayStation Network has 50 million registered users, Seybold said in an e-mail.

Sony fell 1.2 percent to 2,462 yen as of 10:52 a.m. on the Tokyo Stock Exchange. The shares of the world’s third-largest TV maker have declined 7.8 percent this year.

Founders, Investors

Hulu, based in Los Angeles, was founded by General Electric Co.’s NBC Universal and News Corp.’s Fox. Walt Disney Co.’s ABC and private-equity firm Providence Equity Partners Inc. are also investors in the website.

The site, which now lets computer users watch shows for free and gets its revenue from advertising, is seeking to expand the ways users can view programming, as well as add new shows to attract paying subscribers. The company will need to renew program rights from owners including NBC at the end of 2011, according to Laura Martin, a Needham & Co. analyst. The network investors also offer shows on their own websites.

A subscription would put Hulu in more direct competition with Netflix Inc., which supplies online and mail-order access to movies and past-season TV shows starting at $8.99 a month. Netflix already provides its online movie service on consoles from Sony, Microsoft and Nintendo Co., as well as through Blu- Ray players and Roku Inc. devices that connect TVs to the Web.

Hulu Chief Executive Officer Jason Kilar has said his site’s ad-supported model is profitable on a cash-flow basis.

The website garnered $52.4 million in sales in February, with 72 percent going to the content owners, according to estimates from research firm SNL Kagan. That left Hulu with $14.7 million in revenue, $12.6 million in costs and a $2.04 million profit, SNL Kagan calculates.