Hulu's Flexibility in Acquiring Content Could Pressure Netflix (NFLX)

Netflix (Nasdaq: NFLX) is on watch Wednesday following reports that rival is turning up the heat on content acquisition.

According to the WSJ, Hulu's willingness to play well with television broadcasters -- such as Time Warner (NYSE: TWX), AMC Networks (NYSE: AMC), and 21st Century Fox's (Nasdaq: FOXA) FX Networks -- is helping the streaming content provider to grab more content from Netflix.

The most recent example is for the series Empire. While Netflix wanted Fox to stop stacking the show (Fox was offering the entire first season via cable video-on-demand services, versus the traditional practice of offering a couple of episodes), Hulu was fine with the practice and was also willing to pay more. Thus, Hulu won the rights for Empire.

Notably, Hulu is a joint venture between 21st Century Fox, Comcast ’s (Nasdaq: CMCSA) NBCUniversal, and Walt Disney (NYSE: DIS).

Following a failed sale attempt in 2013, Hulu has moved to aggressively bolster its $7.99-per-month subscription service. The most recent win was for the rights to Seinfeld, which came in at $700,000 per episode.

Hulu does have some advertising, which appeals to broadcasters, though the company only operates within the U.S., unlike Netflix. Hulu's free, ad-supported service is only available through desktops and Android devices. The company has said it is growing both advertising and subscriber revenue when both living room and mobile device consumption is taken into account.

But, while Hulu is looking to double its spending on content to $1.5 billion this year (about the same as Amazon (Nasdaq: AMZN) spends on Prime Video), Netflix may have a leg up with its $3.3 billion CapEx plan, up 18 percent over last year.

Shares of Netflix are indicated higher Wednesday.

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