Hulu's backers bicker as Web video soars
Woo wee, did Hulu's fortunes flip-flop fast.
Jason Kilar, Hulu CEO
(Credit: Greg Sandoval/CNET Networks)The Web's deepest stockpile of full-length TV shows and feature films is seeing some very public infighting over its future. The disagreements are over how Hulu should generate revenue and even how to sell ads, according to a report in Mediaweek.
Things were going so well. Since Hulu's October 2007 launch, the Web video site founded by NBC Universal and News Corp., has grown its audience, generated big ad revenue, and been bathed in positive press.
Hulu has mounted the only serious challenge to YouTube. The site also enables its TV network backers to offer viewers an alternative to pirate sites. But the indications are Hollywood is dismayed over Hulu's earnings. On the issue of Web revenue, the studios seem to be saying: "Is that all there is?"
The first signs that Hulu may not be the cash cow that everyone involved had hoped for came earlier this year. Instead of ballyhooing the selling out of ad inventory like it had done a year earlier, Hulu's managers hushed up.
Then, NBC Universal CEO Jeff Zucker and News Corp. Chairman Rupert Murdoch said publicly that Hulu may charge for some content. In an interview with Dow Jones last week, News Corp. COO Chase Carey said it's important that Hulu have "a real subscription aspect," but added some content will always be free.
Want to bet that the content you'll have to buy will be the latest and most popular TV shows and films?
Hulu's management is wrestling with these issues at a time when the public increasingly develops an appetite for high-quality Web video.
The number of U.S. households with broadband access that watched full-length movies and TV shows online doubled in the past year, according to research firm, Parks Associates. According to the firm, 45 million households regularly watch either TV shows or films via the Internet.
Jayant Dasari, a research analyst at Parks, said people like the control that sites like Hulu give them. If they miss a favorite TV show, they can get caught up on Hulu.
"If they're on the road or don't have access to a (Digital Video Recorder) they are more than willing to consider the option of broadband video," Dasari said. "This is a trend that can no longer be ignored."
(Credit:
Greg Sandoval/CNET Networks )
Dasari said Web video's growth is being stifled by the lack of content available at Hulu and other sites. For example, there are only a handful of feature films available at Hulu. Crackle.com, Sony Pictures' Web service, only posts a fraction of its vast library of films on the Internet, but there's not another studio even offering that.
So what? What does it mean if the studios hobble Hulu? Consumers have watched TV for over half a century. They can still go back there. Right?
Big Champagne CEO Eric Garland, whose company tracks traffic on peer-to-peer sites--where most illegal file sharing occurs--told me recently that consumers are heading online for video entertainment and he doesn't expect them to return to their traditional viewing habits ever again. Garland's data shows that Hulu is the first legal Web service to snatch market share away from the pirate sites.
He also said that the lords of video, with their rejection of Internet businesses, are behaving much the same way the music industry did when confronted by the digital age. If network and film studio executives are dissatisfied with the returns they see from Hulu and similar sites, they should consider the possibility that this is all the new media landscape will yield, Garland said.
Greg Sandoval covers media and digital entertainment for CNET News. He is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at http://twitter.com/sandoCNET. 
The reason Hulu does not work on smartphones (and PS3) is because the studios are afraid it will cannibalize the pay-per-download services for those devices.
Of course, the average user isn't going to think "Hmmm... Hulu doesn't work on this thing for some reason. I'll just go to the iTunes/Playstation/etc. Store and pay money for whatever it was I was going to get for free!". No, the average user is just going to pull out a netbook and go to hulu, or have a nephew explain how torrents work, or simply go watch one of the several dozen uploads YouTube hasn't taken down yet.
I'd imagine the conversation in any of the network's office is going something like this:
"Sir, it appears we really are taking market share away from youtube and even piratebay. And we're making money!"
"Yes, but we're not making a sh*tload of money. Let's put up a pay wall."
(ten minutes later)
"Sir! Hulu's traffic has dropped to zero, and there's now two-hundred seeds and ten-thousand leechers on randomtorrentsite for last weeks House/Leno/etc."
"Well... go warm up the lawyers..."
Stick with PC's or Laptops. Phone should behave...like a PHONE.
20-40 minutes of the Daily Show or a sitcom during lunch worked fine and didn't kill the battery.
If you're in your car, you can plug it in the car charger, pipe audio through the car stereo and sit in the fast food parking lot getting a quick meal and show.
People don't want to carry a laptop everywhere they go.
The problem with hulu is simple. Ruper Murdoch.
Too bad I can not do the same watching a hi res version of same program on PS3 via Hulu.
Advertisements allow me to view it so why not advertise on my PS3? I will never watch -PAY PER VIEW-
As I find it a rip off. HULU WAKE UP AND SMELL THE COFFEE!
I am perfectly fine watching more ads during Hulu shows, and as the service grows, Hulu should feel free to charge more for those ads too. But people will always flock to free services over paid subscriptions. Unless the monthly subscription is marginal (say $5), or offers greater content for a higher price (complete libraries for shows, studios, or downloadability to an iPod) I think it will push people back to illegal means.
I live in a rural area, and love Hulu, mainly because I am not able to get NBC or Fox with my current antenna. If they begin charging, say, $20 a month for Hulu (which is why I am scared of a Comcast/NBC Universal deal) I will just spend $150 and get a stronger antenna, then another set of money for a DVR and go back to time delayed programming the old fashioned way. I am sure many more will just hop onto an illegal server and just download the content.
I guess another issue is if they make Hulu a subscription-based site, what will the networks do with their own content on their own websites? Will they strip shows off of their sites, or make them portals to Hulu? Part of their issue is probably due to the fact that they cannot sell as much on their own sites because most people go to Hulu instead.
Hulu is still far as mature as a service, and it needs time to grow and evolve. Quite frankly, I feel I see way too many of the same ads over and over again. I think that in Hulu 2.0, the site needs to be smarter. Ask the user to fill out quarterly or monthly questionnaires in order to use the service. Mandate logins for viewing, not just adult-tinged content, and have the ads target different demos - Google-like in ad placement. Keep streaming free, but allow for 'rental' downloads as part of the subscription model, as well as HD, ad-free streaming.
Heck, even place subtle banners above and below content, even in full-screen mode, just don't make it subscription only....
But not just to watch something.
A TV station that did that would just get me to change channels.
Hulu and the media outlets post films and content to make money.
The question is... 'How much do they charge so that the majority of their market is willing to pay that price.'
So someone like Joe who is a TV freak and wants to catch up on his shows while sitting somewhere waiting for a friend, he'll pay whatever they charge.
Someone like me? Sorry, not worth the content at any price. I pay for cable and have a DVR also content on demand.
So they have to figure out a price that will optimize their profits.
They can already force you to watch commercials. And they can charge a higher rate because they can track you specifically and share the data back to their customers. Meaning they can say how many eyeballs in each city watched the program. (Say good by to Nielsen!)
But one commercial break is one thing. 10? Sorry, I'll pass.
The problem is that I don't need to watch my 'favorite' shows that I don't DVR. Sorry but NBC charges $.99 a show when you watch it on demand. Not worth it. I'll DVR them and then watch CBS shows that are free.
Banners etc are a waste. If you bother to track your eye movements... you tend to ignore them and focus on your show.
If you're willing to go to an illegal service, then you're willing to pony up the cash.
It will suck.
And drive everyone back to P2P sharing and similar sites.
Back to the free alternative
Cody
so the content owners make these shows for TV. They show ads and make money. same with sites like hulu. but try to watch hulu on a PS3 and it is blocked? Why??? i would be more than happy to watch the commercials if I could watch it on my main TV in my family room without having to jump through a million hoops.
oh well, i will go outside with my kids and enjoy them more. as much as i like a few shows, if i miss them and there is no easy and free way to watch them again, i can see them on the re-runs. if i never see them, no big loss.
If they want to run ads like regular TV stations do, that's fine by me. This type of revenue stream supports TV stations so I don't see why it shouldn't support Hulu. If I could watch on a PS3 that would be great, but I wouldn't pay for it. I want to watch TV on my nice LCD TV I paid a fortune for, not on my dinky computer screen (and especially not on a phone screen). Ads are fine if they don't distract from the viewing experience (ala TV), but I wouldn't pay a separate fee on top of ads.
All these companies just think people want something for free, and although that IS partly peoples nature, mostly people just want good value for their money. On top of that, they seem to think the consumer is made out of money or something.
We have phone subscriptions, cable subscriptions, satellite subscriptions, video game console subscriptions, car leasing, internet subscription and on and on it goes...
Sorry to be the one to have to tell them, but this is a crappy economy, people are out of work, wages are going down and they think we can pay more and more so they can stuff their bloody pockets.
Someone mentioned that perhaps this is all the market will bare. I think that's right on the mark.
People do not want to watch an hour long drama or 3 episodes of 30 Rock on laptop - they want to see them on their big TV in the living room. Right now, Hulu is neat because you can watch an episode here and there when you're bored, but you still are going to watch TV. YouTube is successful, because its a bunch of homemade videos that are 30 seconds long (which is easy to watch on a PC).
I know that it's possible to hook up a computer to your TV and use Hulu that way, but that is just not good enough. Hulu should focus on delivery of content, not being a cool website that competes with YouTube.
The players:
Exec #1: Exec in charge of the new service
Exec #2: Exec #1's boss and top exec of the company
Manager: The program manager who did all the legwork and did everything humanly possible to cover all bases and include everything in his projections and write-ups for every step of the way on the new service.
How the meeting plays out (and I'm sure this happens just about everywhere).
Time: The new service launched at 8am. The meeting is taking place at 1pm the same day; just a few hours after launch.
Exec #1: So, how's the service doing?
Manager: Not bad. People are slowing figuring out how to use this new technology considering we're changing their ingrained behavior. Over 50 years of conditioning isn't going to change overnight.
Exec #2: Didn't you account for that? How can we make it go faster?
Manager: This is matching our expectations.
Exec #2: <looking at Exec #1> How much profit have we made so far?
<Exec #1 looks at Manager for an answer>
Manager: Profit? We're not scheduled to turn a profit for three years.
Exec #1: <trying to play it cool> You mean we didn't make profit yesterday?
Manager: We launched this morning.
Exec #2: If we're not going to make a profit why did we green light this project? Do you want the board to fire me? Outrageous. We need to overhaul this immediately or cancel it.
Exec #1: Are you sure you're measuring everything correctly? Do we need to bring in an expert that's done this kind of thing before to tell us what's going wrong?
Manager: No one's done this before.
Exec #2: I'm late for a meeting. This better make money fast or you're fired.
Thus executive knee jerking, or lake of proper budgeting - meaning the project ran over so profit becomes more important faster, quickly kills a project that had huge potential. I've seen similar scenarios play out.
" they should consider the possibility that this is all the new media landscape will yield."
No. Or at least this should be all the landscape will yield right now. This is very new. There are multiple generations that won't understand or certainly adopt this new form of content delivery. Also, why make such kinds of judgment calls in the middle of the 2nd worst economy that this country has known? That's just foolish. Consider Amazon's story. Most critics didn't think it would survive. It spend what like 5-7 years of not making any money. But, most of that was because they kept reinvesting any money they did make back into the company. Now, they do over $10B in sales annually and are major retail force to be reckoned with.
Arrogance.
Pride will kill a company very easily.
inachu1 - your racist comments don't belong here. Maybe you have forgotten that your great grandparents came here and murdered the natives in building this country. So keep your pride in line.
Some companies that have been put out of business in the United States were put out of business by too much listening to lawyers and other people who should have had NO PLACE in business discussions.
My family Founded Putnam county in New York.
My family did not kill but lived among the indians.
Who is my family? The HUSTIS FAMILY. My Great great great great Grandmother finnished over seeing the building of the Brooklyn Bridge. Go google GENERAL WARREN.
We never killed off any indians my grandfather is 25% American Indian.
So stop spreading your lies.
As it is, the only thing keeping me from using my Netflix to catch up on old TV shows...well actually, nothing is stopping me. I just finished watching the rest of the seasons of Angel on Netflix because I got tired waiting for the rest of the seasons to be made available on Hulu. This is a recurring thing with Hulu, really. Just scroll through the threads of conversations on how long it takes for newer seasons to show up on Hulu.
So if Hulu started charging for access to the newest episodes, what's going to stop anyone from going straight to the networks' own site and watching it off from there? Or worst case, people like myself complete that HTPC and digitally record shows, bypassing Hulu altogether.
Actually, I guess worst case (for Hulu and the networks) is people grabbing their shows off torrents, thus bypassing all ad revenue.
I do not really see much that I personally will go out of my way to watch in thier catologue of shows. perhaps they should see how popular thier media is. More eyeballs = more adds viewed. It also means more licensing fees . I will just have to work under the assumption they are working on expanding thier catalogue.
Beautiful work Hulu, I hope to be watching you 10 years from now.
I propose that it remain free or optional pay for those who do not want to see commercials.
Or Alternative pay site to see commercials and tv programming but at higher quality.
The only thing that angers me is they removed season 9 of Star Gate.
Mistake? How so?! BRING IT BACK!!!!!!!!! Grrrrr!
Hulu is doing it right. Hollywood is just greedy.
Here are my options:
1 - I can record the program in my WMC computer and the process the show using Lifeexender
2 - Can watch it using HULU
3 - I can watch it when it becomes available in Netflix streaming
4 - I can watch it when it becomes available in Netflix in a DVD
Notice that from these options only HULU will have commercials.
Also the studios would like to kill Netflix (or get more revenue from them)
As a last resort you can always get the show "somewhere else"
I admit that I would not object terribly to a subscription-based Hulu, but it would have to be reasonably priced. And if I do end up paying, I would prefer not having to watch ads. I know it's probably too much to ask for, but I really despise advertisements -- they are the number one thing which drove me away from watching live TV. I would pay to avoid them, but I have a feeling that they'd manage to charge for a subscription AND still air ads.
FYI, as a techie, I set up a proxy server on my Ubuntu box, pass all PS3 traffic through that, modifying the headers for hulu's domain to fein a FireFox session and I can watch them. So it's not technological, it's merely some spat with Sony. Makes no sense, Ads are unskippable and I might just get hooked on a network TV show. Yeah, go figure why they'd want me to NOT watch it on the big screen?
Hulu (or at least the companies feeding it) absolutely DOES NOT want Hulu content to be viewed on a television. They'd block your VGA ports on your HDTV if they could figure out how.
It's all part of the antiquated concept of 'revenue windows'. Television programming is meant to be viewed on -television-, then, five days later, we get to watch it on a TBS or whatever, then, three days after that, we are graciously granted permission to see the episode on Hulu, then five weeks later, it disappears from Hulu in anticipation of a DVD release in a few months.
It's little more than double dipping, or actually, quadruple dipping. Possibly more, if I've missed a step somewhere.
Allowing Sheepy McConsumer to view online media in decent quality on a large television outside of a meticulously engineered timeframe undermines the entire deal and its revenue stream.
I'll be blunt: I would be willing to pay 10 dollars a month for access to everything on Hulu..... no more.
1. Subscription TV
2. Piracy - yes there are pay piracy alternatives too
But then again, when people on the Internet want something, a lot of them (read: probably most) of them are going to want it for free. They want you to give it to them for free, and if you don't give it to them, they'll find a way to steal it from you. Always.
- by November 16, 2009 8:28 PM PST
- Hulu can do anything for me as long as Rupert Murdock is behind it. I hate the hell out of that racist.
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