Kara Swisher, of All Things D, opens a Sundance Film Festival panel Saturday called "Where Do We Go From Here: Icons of the Digital Age."
(Credit: Michelle Meyers/CNET News)PARK CITY, Utah--As Hollywood stars drew crowds to the screening rooms here at the Sundance Film Festival, several Web media pioneers--celebrities in their own right-- also got the spotlight Saturday at a panel focused on the future of entertainment in the Digital Age.
Moderated by All Things D's Kara Swisher in her fourth such Sundance engagement, the panelists were Netflix founder and CEO Reed Hastings, YouTube CEO and co-founder Chad Hurley; and Jason Kilar, CEO of Hulu, which is NBC Universal and News Corp.'s joint online video venture.
Each had a somewhat different take on how they imagine consumers in the upcoming decade will view their entertainment. But their overriding themes were one and the same: users will be in control.
Gone are the days of some TV programmer deciding what time slot consumers will view a particular show. Same goes for theater owners dictating show times. As they are already doing, consumers will seek out their own content and will play or stream it when they want it, where they want it, and on the device or their choosing. As Hastings put it, it's an "on-demand revolution."
YouTube founder and CEO Chad Hurley.
(Credit: Michelle Meyers/CNET News)"The linear broadcast model of today is going to disappear" relatively quickly, said Hurley, who later noted that distribution on mobile devices is the fastest-growing part of YouTube's business.
In full embrace of the "consumers choose" mantra, Hulu actually lets users choose the advertisements they want to watch.
The key, however, will be helping consumers "discover" content, the panelists said--"discovery" being an industry buzzword of late for both video and music aggregators and sellers.
Hastings pointed out that most Sundance films, for example "are not going to be loved by 2 million Americans," or enough to justify national distribution. So for filmmakers who are now able to distribute their work cheaply via the Web, it will be about targeting the right audience communities.
Of course, that's where social networking will continue to be important, they agreed, whether it's done through major social-networking sites like Facebook or MySpace; through social-networking functionality built into sites like Hulu, Netflix, and YouTube; or something in between (i.e. Friend Connect or Facebook Connect).
Netflix CEO and founder Reed Hastings.
(Credit: Michelle Meyers/CNET News)"We will never be as good as the world at surfacing content for the individual," Kilar said, alluding to social networking as a tool for recommending videos. However, he added, Hulu isn't "aspiring to be a social utility."
Hastings hopes the digital realm can get to a place where customers can better weed through the content that's out there. For example, right now, about two out of every three shows or films you see are just "eh," Hastings said, and one out of every three is "wow!"
"If we can collectively shift it to two out of three is "wow," he said, consumers will have a better experience and will likely take in more content.
Looking deeper into their crystal balls, the panelists envision continued improvements for users, with expanded broadband and Wi-Fi offerings, new business models that fairly compensate content makers, and distribution experiments that might one day lead to films going out on the Web and DVD at the same time as they make their theater premieres.
All of the above, however, will require companies to continually concentrate on the user experience, they agreed.
The days of living room entertainment are not likely to go away, they also agreed, with Kilar citing a statistic that more content is viewed in the living now than last year. "I don't see that going away soon." It will just be viewed in different ways, he said, perhaps via a large Internet-connected monitor.
Hulu CEO Jason Kilar.
(Credit: Michelle Meyers/CNET News)In closing, Swisher asked the panelists to reflect on their favorite gadgets and a device they'd like for the future.
Kilar, who said his favorite gadget is a Flip Mino, hopes someone will manufacture an "open" plasma TV that doesn't come with the standard "walled garden."
Hastings, whose favorite gadget is an Xbox on which he plays video games and watches movies with this son, hopes to one day see an iPhone "with good reception."
Hurley, for his part, loves the Wii and his iPhone, and looks forward to seeing a large iPod that would be a sort of big-screen media player.
SAN FRANCISCO--Hulu CEO Jason Kilar readily acknowledges that digital movie sales from sites such as iTunes mean higher profit margins for Hollywood studios than ad-supported sites can deliver.
But Kilar defended ad-supported services like YouTube and Hulu--formed by News Corp., and NBC Universal--by pointing out that they can draw from a much larger market. Film sales account for $20 billion annually, while ad-supported revenue is $80 billion, Kilar said during his keynote address at the NewTeeVee Live conference on Thursday.
Kilar was responding to comments made by Tom Adams, who operates Adams Media Research, an entertainment industry research and consulting firm. In an interview with CNET News, Adams argued that pay movie services will always be more welcome in Hollywood than ad-supported rivals.
The reason for this, according to Adams, is movie sales and rentals typically enable Hollywood to pocket more cash per viewing than it gets from ad-supported distribution.
Kilar concedes this, but says the market for ad-supported TV shows and films is so much deeper, that even if Hulu is less profitable on a per-viewing business, it still could conceivably generate more revenue for content owners. To snatch more of these ad dollars, Hulu's plan is to make the site a more effective advertising platform than other ad formats.
Jason Kilar
(Credit: Hulu.com)"Hulu is a very simple business model," Kilar said after his speech. "We believe that if we provide an advertising service that has higher brand recall, higher purchase intent (from users)...relative to billboards, radio and newspapers, advertisers will respond to that. And they are. That's why they are paying premium for ad spots on a higher cost per thousand (CPM) relative to other environments."
Adams also asserted that Internet users won't tolerate the same number of ads online as they do from traditional TV. Hulu posts four times fewer ads into its films and TV shows as television broadcasters and Adams suggested that visitors aren't tolerating more.
"(Adams) made it sound like we tested more ads and they didn't work," Kilar said. "We haven't done anything different than what we're doing now. It's always been two minutes of ads for every 22 minutes of content."
In its first year in business, Hulu has surpassed almost everybody's expectations, certainly Google's. Execs at YouTube's parent company at one time referred to Hulu as "The Clown Company." The joke turned out to be on them.
Hulu has become a force when it comes to offering full-length movies and TV shows. Kilar won't share data on revenue or user adoption, but did say Hulu now sees 12 million monthly visitors and serves 145 million monthly streams. Among Hulu's biggest accolades is that YouTube has followed it into offering full-length TV shows and feature films.
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