Who buys Hulu?
In the world of college, Hulu is a widely used resource to catch up on missed television shows for those students that don’t have access to TV otherwise. In the expanding maturity of the internet, such sites like this succeed in providing great products that wouldn’t be available otherwise. However, there are many big corporations like Google, Yahoo, and Amazon that have come to define the internet and what we have access to. Now with Hulu failing to keep itself afloat, these corporations are now at the prime opportunity to buy Hulu and add another great facet of the internet into their repitoire.
These companies will essentially compete in what is a sealed first price auction, in which the bid that each of these companies makes for Hulu are private and in the highest bid is the value that is paid, with Hulu going to the company that made that bid. So for these companies like Yahoo and Google, it is all about them calculating their payoff from the bid that they will make for Hulu compared to the value that they think they will get out of the purchase (v-b). If a company bids above their calculated value for it, they will receive a negative payoff. In general, this would be a poor decision because you want to try and get a positive payoff instead. However, if these companies are making biger profits in other sectors of the company, then they consider to bid higher than their value so their other profits could offset the loss on their payoff of Hulu. Each company must take in everything to account in how much they think Hulu is a necessity and whether their negative payoff could be offset by some other profits.
Ideally, each company would want to bid a little bit below than what their actual value for Hulu would be. This is the optimal strategy for a first price sealed auction, in which you want to bid just shy of your actual value so you can still try and win the bid and still end up with a positive payoff. All the companies competing for Hulu will be in a mental battle, trying to figure out the others’ values of how much they’re willing to spend, and if they can afford to take negative payoffs. The values of the purchase of Hulu for each company probably range greatly across the board. The values are all dependent on the wealth of the companies and how badly they want Hulu. Each company needs to try and figure out the company’s true values and consider their own and how much negative payoff they are willing to lose. On the other hand, the companies can go the complete opposite way and all consider Hulu to be not that great of an assett, all thinking that there is no way they would go above their true value. So all of them could end up in competing to try and find the low enough price where they get a good payoff but still win the bid of Hulu.
So who will buy Hulu? Only time will tell……………and values.
Source: http://gizmodo.com/5833157/which-hulu-bidder-should-you-be-rooting-for