FROM CHALLENGER BRANDTO BRAND POSITIONING.

5.15.16

Today’s script.

• Surveying the landscape.• An opportunity emerges.• A Challenger is introduced.• An emotional positioning is discovered.•Hulu becomes the hero.

THE CURRENT LANDSCAPE.

Netflix leads.

Just being first gives them a leg up. They’re practically the Kleenex of the category.

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They’re all in on original.

They spent $6 billion dollars to make 25 days of original content this year.

And they’re shifting spend from brand promotion to an original content-driven strategy.

They’re shockingly good at brand love.

From their fan-first original content selection (Arrested Development, Fuller House), to experience and social initiatives that keep the brand interesting.

They constantly adapt, refresh and surprise.

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Amazon’s a me too.

Source: Consumer Intelligence Research Partners. “Amazon Prime Hits New Highs.” 1/1/15

Streamable content is a piece of their larger ecosystem, not their core business.

Created to ensure loyalty of Prime subscribers and sway prospects.

45% of Amazon customers are Prime members.-

Prime members spend 2.4 times as much as non-members.

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Hulu’s getting outpaced.

Subscription Video-on-Demand services used by US digital video viewers, 2013 – 2015.

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Source: Hub Research/Emarketer – April 30, 2015. (Note: Ages 16-64, among those who have watched TV programs or movies online via any device.)

65% subscribe to Netflix, up 15%

45% subscribe to Amazon Prime, up 14%

26% subscribe to Hulu, up 6%

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Because people don’t know why Hulu is awesome.

99% awareness overall.

“Aren’t they exactly the same?”

“I already have Netflix.”

“I don’t want to pay for another service.”

Sources:1. Hulu Brand Tracking Study – Aided Awareness for May’15 2. Razorfish survey findings, November’15 (Note: 20% awareness that Hulu offers more TV generally or more current TV specifically.)

Meanwhile, rivals are sprouting like weeds.

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Originals are the default category currency.

The convention says that originals drive loyalty, subscriptions and differentiation.

The bottom line.

Netflix is owning it.Amazon isn’t going away.Hulu is a distant third.In an increasingly competitive category.Yet beyond originals, it’s difficult to tell one competitor from another.

Hulu needs to differentiate.

To take the offensive.

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And act like a challenger brand.

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What does that mean?15

It’s not just about challenging leaders.That’s certainly a piece. True Challenger Brands must have the opportunity to challenge category leaders.

But they must also fight to keep their place in the consideration set –taking on all comers.

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Being a Challenger is also a state of mind.

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Challenger brands are hungry.

They have ambitions.

They may not have the finances of the category leaders but they can outsmart, out-market and out-strategize them.

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Challenger brands take risks.

They act on their ambitions.

Challenger brands aren’t satisfied to be smaller versions of the category leader. They break category conventions and pioneer their own way.

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How to act like a Challenger.

1. Be a Lighthouse.2. Force Re-Evaluation.3. Seize Thought Leadership.4. Stay Fresh.

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1. Be a Lighthouse.

Develop a very clear sense of who or what you are as a brand and why.

And then, like a lighthouse, project that identity intensely, consistently.

Note: This requires ruthless sacrifice.

2. Force Re-Evaluation.

Prompt a significant re-appraisal of how consumers view your brand.

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3. Seize Thought Leadership.

Challengers allow themselves to ask naïve questions like why does the category have to be all about this? Why can’t it be all about that instead?

They purposefully change the conversation and challenge conventions, while grounding themselves in others.

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4. Stay Fresh.

Constantly refresh the way consumers experience you while reinforcing your brand in a way that benefits both parties.

Become constant manufacturers of social salience and mythology.

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How could we apply these Challenger Brand tenets to Hulu?

1. BE A LIGHTHOUSEDevelop a very clear sense of who or what you are as a brand and why.

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We have an idea.

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Question: What makes Hulu different?

Is it original content?

Original content is important

It builds loyalty and brings in subscribers.

But it’s cost of entry.

Everyone’s doing it.

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Consumers are fickle.

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New threats catch us by surprise.

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Misattribution is a real problem.

Number of consumers who believe that Hulu exclusive shows are available on...

6-21% vs. 8-29%

In a survey, most believed that Netflix had the most current TV shows.

Sources: Hulu Brand Tracking Study, 5/15..Razorfish survey findings, November 2015.

You need something that can differentiate for the long haul.

1. Grounded in truths about your brand and your offering.

2. Believable.3. Ownable. 4. Emotionally motivating and

inspiring.

Something that is:

TV is in your DNA

Hulu was established by TV networks.

You’re heavily invested in TV partnerships.

You have next-day television and original episodic content.

TV changes behavior.

A Razorfish commissioned survey showed that half of respondents were more interested in Hulu when told they could get their favorite current TV shows there.

And 35% said they’d consider joining or signing up for a free trial.

Source: Razorfish survey findings, November 2015.

Your target connects via TV.

It’s about the content, but it’s really about the community.

FOMOs

Literati

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TV helps them connect every week.

Hulu is the only player with a treasure trove of next-day television.

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How can we Lighthouse that?

What’s the bigger emotional idea around TV that Hulu can own?

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The romance of television.

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Movies are a singular story, told once, with a beginning and end. TV grows alongside its viewership.

It lives and breathes as an entertainment long-form. Its characters unfold over time. We get to know them, to love them and to hate them.

We root for them to prosper, or to get what they deserve. We care about where they’ve been and where they’re going. We miss them in anticipation of the next episode.

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TV is full of characters that we know as well or better than our own family. Their quirks, dreams and fears.

They make us feel strongly and see ourselves in new and different ways.

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This isn’t “Netflix and Chill.” TV shows require long term commitment. We develop relationships with the people on the screen.

We watch the shows together, whether in the same room, at the same time or at different times completely – we connect over them. We talk about them with our friends and family as if they were real.

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This isn’t about the specific content.

It’s about dipping into the emotional and psychological well of our relationship with episodic content - the history, the feeling and the love – and OWNING it.

It’s perfect for the 21st century.

Social and digital have the power to deepen our connection to stories, characters, creators, and other fans.

We can encourage and prolong conversation around shows we love while inviting more into the fold.

And this is interesting…

“70% of streams that happen at Hulu will be on some form of a living room device. A lot of people when they

think of streaming, they think mobile, they think desktop. And what we’re seeing is there’s a flight back

to the living room.”

- Mike Hopkins, Hulu CEO

We want to evoke a feeling of a new golden age of television.

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“I've learned that people will forget what you said, people will forget what

you did, but people will never forget how you made them feel.”

- Maya Angelou

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2. FORCE RE-EVALUATION.Prompt a significant re-appraisal of how consumers view Hulu.

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From one among many, to the one.

Because it’s all about the content, competitors look like conduits, not brands.

This leaves a hole Hulu can fill by driving home an emotional differentiator.

From what it is to how it feels.

Unite all marketing around the emotional experience directly supported by next-day TV and amazing originals.

What could this look like?• A brand re-launch campaign that

brings this story to life.•With multiple touch points up and

down the funnel to reinforce and inspire.

3. SEIZE THOUGHT LEADERSHIP.Break conventions. Change the conversation.

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Pivot off category conventions.

For example:

1. The content defines the brand. 2. Anywhere, any time is best.3. Promote the content, not the

experience.4. Overwhelming abundance of content.5. Binge watching/guilty pleasure.

Hulu’s opportunity:Elevate the conversation.

TV isn’t junk food. It’s rich, charming experiences. It’s a catalyst for quality relationships. With people that you get to know and love. And experiences you share with those you love.

We have an obligation to give entertainment the reverence it deserves.

What could this look like?• In-depth experiences that build anticipation

between episodes.• Smarter, more emotional social conversations

around content and brand.

The conversational shift.

From:1. Content defines the brand.

2. Anywhere, any time is best.

3. Promote the content, not the experience.

4. Overwhelming amount of content.

5. Binge watching/guilty pleasure.

To:1. Experience defines the brand.

2. Not where, but who with.

3. Promote the experience first.

4. Quality, not quantity.

5. Not empty calories.

4. STAY FRESH.You have to change to stay the same.

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Never Stop Romancing.

Consistently deliver surprising new ways of experiencing the romance of TV while staying true to your core values.

What could this look like?• Deeper, second screen

experiences for the content.• Good old fashioned fan club

experiences, updated for this new age.

1. Be a lighthouse: With a brand positioning that taps into the emotional power of TV in our lives, supported by truths about Hulu.

2. Force Re-evaluation: Make people take a fresh look with a strong POV on the power of TV.

3. Seize Thought Leadership: Elevate the conversation - TV is not junk food.

4. Stay Fresh: Never stop romancing your consumers in insightful and surprising ways.

Hulu the Challenger.

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QUANTITY QUALITY

TV

CONTENT

Perceptual matrix.

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THANK YOU