The situation at Hulu apparently hasn’t improved much since the Wall Street Journal reported on the state of its dys-functioning business model. In a recent blog post, I summarized the article as well as speculated on the likelihood that Hulu could eventually revitalize its business model and improve its performance through 2011. From an observer’s viewpoint, the setup appears wholly counterproductive. With the infighting and conflicts of interest on the part of Hulu’s owners and Hulu CEO Jason Kilar, it is simply an impossible arrangement.

Now it is looking like Kilar’s official departure from Hulu may be imminent, and when he goes there may be no one willing to take his place. What happens then? Here’s is my admittedly ignorant prediction: the network owners will either instate a puppet to morph Hulu into an online cable provider, or dismantle it altogether. Ultimately, I think Hulu is going to undergo a massive metamorphosis and come out looking like nothing its current users will recognize. It will also continue to suffer enormously against its competitor Netflix. Why? Because its owners don’t want it to succeed! They are resisting the entire concept of free video streaming for the very reason they were forced to create Hulu in the first place, because it was and is cutting into their profits.

In a blog post criticizing Hulu’s owners, Kilar writes that Hulu needs to offer its consumers low prices, convenience, and innovation in order to be successful. But I’m sure he knows that he’s fighting a losing battle. His hands have been tied behind his back. “If Kilar leaves, anyone interested in replacing him will find that Hulu’s CEO position is impossible,” says the CNET article. I think it’s because the networks are sabotaging its success, but I guess we just have to wait and see.