I just wrote a piece over at Gamers Daily News talking about how, if Microsoft were to pick up Hulu (and they are listed alongside Google & Yahoo as potential buyers) they could roll it into a new, higher level, higher priced, Xbox LIVE subscription. I also just read something that says MS is looking at a Zune-branded video subscription service and I thought, it could go down like this.

Here’s a quote from that article:

Some people are talking about Microsoft perhaps working on a subscription video service, much like Hulu Plus or Netflix streaming packages to be branded under the Zune name. Microsoft has also been named in rumored talks about a purchase of Hulu which would give them an instant subscription service for video.

However, one has to wonder, which way would be cheaper and easier to go? Is the purchase of Hulu less complicated than building out the Zune marketplace to include a subscription video service? Google is said to be working on one, and also interested in Hulu. Amazon has its Prime service which gives access to a library of video for streaming.

Isn’t it fun to do all this hypothesizing and prognosticating?

But they have to fend off some other heavy hitters in the Hulu bidding including Google, Yahoo!, Amazon and DirecTV.

One Less Competitor For Hulu

Nope, Netflix isn’t in the running. Like I said in my other article, it wouldn’t be prudent for the Hulu owners to sell to Netflix. Plus, they (the Hulu owners, currently a trio of television networks) see it as killing competition for their shows in the end since there would be one less potential licensor. A pity, but I think it’s OK since I still say Netflix should be moving in another direction.

Google has been looking and talking about subscription, premium video streaming for some time now. They have promised large volumes of movies and such to be available through YouTube, but so far just films have shown up (not really en masse), so they could really benefit from Hulu as they would get access to a wide range of TV, en masse.

Now Zune does have TV content, that means they’re already a step up on Google. In fact, they’ve even got Wilfred which I find perversely funny. You can buy an episode for 240 Microsoft Points, or $3 for those not in the know (80MSP = $1). Then again, I can watch Wilfred on Hulu Plus anyway. However, Episode 3 of Wilfred is available to buy on Zune, but not on Hulu Plus yet… see the strategy? It’s just like film to DVD to VOD, etc.

For Microsoft it comes down to this:

Is buying Hulu cheaper than building out a subscription service?

Everything on Zune is able to be purchased and some films are rentable so they are only a few steps away from having a time-based subscription model. It makes perfect sense for them to buy.

But What About That Competition Thing?

Of course, if you apply the Hulu Owners’ logic on not selling to Netflix (the less competition claim) then they might not want to sell to Microsoft, or Amazon, or DirecTV which then leaves Google and Yahoo. Between those two, I would say Google would be better positioned, as Yahoo! has shown they don’t know what they’re doing with online video while Google bought YouTube and has already moved to monetizing that.

So while Microsoft may have designs on building out that subscription-based streaming video service, they might, in the end, have to do it without Hulu. Either way, you can bet it’s probably coming.