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Hulu, the second-largest Web video service behind Google's YouTube in the United States, is said to raise $200 million to $300 million in a deal which valuated the company at $2 billion. Huu could file a prospectus with the U.S. Securities and Exchange Commission before the end of the year.
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Hulu is backed by General Electric Co's, NBC Universal, Walt Disney Co, News Corp and private equity firm Providence Equity Partners.
The web video service was launched three years ago as "an ambitious attempt to harness the explosive growth in online video viewing."
In terms of web video revenue, Reuters writes:
The worldwide online video market is expected to hit $16.1 billion through paid and ad-supported services by 2012, according to ABI Research, which tracks media trends.
The reasons for the IPO
* Tapping into the public markets is an option to be able to compete with companies like Netflix, Google and Amazon.
* Amazon is going the Apple-way by offering a low-cost VOD service.
* Netflix is expanding its territory with new business models, like the only-online-streaming one in Canada.
* These sort of developments intensify competitiveness in the market, where distribution is key, cause and effect.
* The cause and effect referring is with regard the second option, attracting media companies to contribute new programming or raising money from its existing partners.
Without quality content, the distribution won't be exploited as effective as it could be, but without good distribution, content owners are less willing to take this step.
Concrete spending of raised money
The offering is too small to provide much liquidity to shareholders, one source said. Proceeds from the offering are expected to be used to bring new shows to the subscription service, a separate source added.
Relating this to the abovementioned reason it's a sensible decision to bring new shows to the subscription service.