hulu-video-ad-viewsIt seems Hulu is on fire these days. Last month the online television and movie hub grossed over $19 million in video advertising revenue by our calculations, and comScore placed Hulu securely in the number one position for video ad views, beating Google by a 65% margin. Hulu has been in the spotlight with its recently launched subscription model Hulu Plus, complementing its core advertising business with a Netflix competitor. The company has even stepped into the original content game. And now, according to the New York Times, Hulu is preparing for an I.P.O that could value the company at more than $2 billion.

But is Hulu really worth that much? According to the Times, Hulu makes little in the way of profit; it reported making more than $100 million in revenue last year. And a recent revision to comScore’s methodology adjusted Hulu’s viewership numbers from 43.5 million viewers in May to 24 million in June. The I.P.O. market is widely regarded as soft. Why would Hulu be making such a play right now?

As a joint studio venture of NBC Universal, News Corporation, and the Walt Disney Company, Hulu has exploited studio content by creating a new type of syndication market—not as a competitor to broadcast television but as a new way to squeeze more juice from the berry. Audience and ad revenues from Hulu’s platform are far from sufficient to produce the programming it features on its site, so Hulu will always be beholden to its owners.

Perhaps the networks’ play with Hulu all along is not to revolutionize the way we consume television, but to demonstrate to cable companies that there is more than way to skin a cat—a terrifying proposition for cable that can be used as leverage—or be shut down as a concession for something bigger—at the negotiating table.

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