Yahoo! Finally Buys Hulu? What It Should Do with Its $8.3 Billion Alibaba Windfall

Ready, set, GO! It is Alibaba IPO time ... right now. Set to be the biggest IPO in US history (that’s $22 billion). And, prescient Yahoo! is set to get $8.3 billion of it.What should Yahoo! do with that windfall?

VIDEO, that’s what! Video is Yahoo!’s future, plain and simple. With this massive cash infusion, Yahoo! now has the means -- like never before -- to take on YouTube ... and potentially big cable operators themselves. The BIG VISION is the massive 1-2 punch of premium broadcast television on-demand and live linear programming. All wrapped with a nice purple bow.  (I also discussed my thoughts on this subject, together with others, in Todd Spangler’s article in Variety).

Yes, Yahoo! tried to buy its way via massive M&A before -- making bids for Hulu and outright acquiring France’s Dailymotion (in an ultimately failed attempt due to French regulators). But, that was then, and this is now. Yahoo! could go back to Hulu and go for M&A v2.0.

With that single move, and if it negotiates “right” (getting the rights it needs), Yahoo! would be the differentiated home for the deepest catalog of premium television broadcaster content. Content that YouTube does not have. And, Yahoo! could significantly ramp up Hulu’s own original programming efforts to further differentiate itself from YouTube and others a la an HBO-like strategy.

One more critical ingredient -- Yahoo! could use some of that cash hoard to woo key tent-pole YouTube creators over to its platform, perhaps offering better economics among other things. And, why stop there? Why just woo? Go all in! Buy! Multi-channel networks (MCNs) are for sale right now -- and deals are happening fast and furiously (just one being Disney’s recent $500-$950 million acquisition of Maker Studios). That would give Yahoo! immediate scale for the kind of authentic, grass-roots-driven short-form video content that is absolutely critical to millennials. And, marketers need to reach those millennials in an increasingly fragmented world. Yahoo! should offer the full spectrum of content -- from long-form to short-form -- to truly do it right. Different platforms demand different premium content.

But wait, there’s more. Yahoo! could use its significantly expanded war chest to take on cable and satellite bundled services themselves. The studios have accelerated the pace of their “noises” in the past two weeks alone indicating that they may now be ready to license in an unbundled world (take Viacom and Sony for example). And, if Yahoo! succeeds in convincing its Hulu broadcasting partners to play in that world, Yahoo! has the potential to offer live linear television programming as well (i.e., a true virtual/OTT MSO). That would be potent. Yahoo! could be THE place for both premium television on-demand and linear programming. Programming that could also be re-packaged in myriad ways -- including into “bite-sized” smaller packages that are optimized for mobile viewing. That too is a critical ingredient, because mobile is increasingly where the eyeballs are -- especially those coveted millennial eyeballs.

Now, don’t get me wrong, that’s a lot of things that must go “just right” in order to make the big “IT” happen.

But, you gotta dream big, right?

And, NOW is the time for Yahoo! to do that kind of dreaming ....