The Trouble With Hulu... Too Many Competing Interests

from the gonna-kill-it dept

Tue, Nov 17th 2009 7:31am — Mike Masnick

Nearly a year ago, we questioned whether or not Hulu could survive. It's not that we don't think the product is well done or well liked. Other than the annoying regional restrictions which pisses off lots of people, the overall service is quite nice. The problem is that there are just way too many conflicts to deal with. The company is owned, in large part, by the networks, and that's leading to all sorts of pressure and complaints about how ads are sold and whether or not there should be a subscription service. From what I've heard, the folks at Hulu understand quite well how an internet-age company should act. The company's rather honest explanation for its fight with Boxee certainly suggested the problem was at a different level than with Hulu management. But... with Hulu having most of its ownership from legacy industries, combined with having so many different players involved in the ownership, it shouldn't come as a surprise at all that the company is now coming under pressure to do things (subscriptions, limits, etc.) that will certainly kill off whatever good has been done. And, since some of the pressure is actually coming from the cable guys as well (who view Hulu as a huge threat), this will only get worse if, as is widely expected, Comcast completes its purchase of NBC Universal.

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Filed Under: online video
Companies: hulu

34 Comments

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thublihnk (profile), 17 Nov 2009 @ 7:38am

I really wish these network head honchos would realize every time they take a clip off Hulu, or make a limitation on it's release, I'm not just going to smile and wait until the DVD comes out so I can give them money. I'm going straight to SurfTheChannel.

The frustrating thing about that is I'm TRYING to give them ad revenue! I'm trying to support the shows I love! But I also want to watch them from the comfort of my computer.
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Dark Helmet (profile), 17 Nov 2009 @ 8:03am

Picture this:
A snake with many heads. Where does it go? Each head wants to slither fowards, but is being constantly pulled in other directions by the other heads on the body. The result is that it goes nowhere.

And what could be worse for a technology based company than to not MOVE?
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Ima Fish (profile), 17 Nov 2009 @ 8:06am

Hulu has the same problem Sony has. On one hand they both want to be really cool tech companies and provide useful products to their customers. On the other hand they feel a need to protect and maximize their content.

We saw how Apple surpassed Sony. I'm sure with all the meddling by the content industries, Hulu doesn't stand a chance either.
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DH's love child, 17 Nov 2009 @ 8:10am

Re:
But Apple was able to stand up to the content industries since they aren't owned by them. Since Hulu is partially owned by them, it doesn't have the leverage so it will end up twisting on the vine and dying same as the content providers' own services are doing now..
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Trevor, 17 Nov 2009 @ 8:15am

The more disturbing part of the news was that Comcast is in talks to acquire NBC Universal. Combining delivery networks (Comcast) with content providers (NBCU) spells trouble for the users. For example, in France, Vivendi was gloating about the adoption of HADOPI because they own both a content providing business and an ISP business under the same roof. As a result, they can leverage their ISP assets to enforce content policing. As a matter of fact, they were one of the biggest lobbyists for HADOPI. The losers in this whole deal are the users, of course.

In a functional free market, the disgruntled users could easily migrate to other ISP without any other intervention. Nevertheless, as we all know, the competition in the ISP business in the US is pathetic bordering on non-existent. In my opinion, this should become an antitrust issue if the deal goes through. Let's venture a guess on the probability of that happening...
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Ima Fish (profile), 17 Nov 2009 @ 8:23am

Re: Re:
"But Apple was able to stand up to the content industries since they aren't owned by them"

Exactly.

"it doesn't have the leverage so it will end up twisting on the vine and dying"

Yep.
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Ima Fish (profile), 17 Nov 2009 @ 8:24am

Re:
"Combining delivery networks (Comcast) with content providers (NBCU) spells trouble for the users"

Agreed, I really hope the feds step in and block this.
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Designerfx (profile), 17 Nov 2009 @ 8:26am

Re:
you can't protect and maximize your content. It's one or the other, and that's the problem.
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Jim, 17 Nov 2009 @ 8:28am

I agree with the post, but question Hulu's motives...
I agree with the theme of your post. Hulu is subject to the same potentially fatal political issues that may have killed MovieLink, which was owned by most of the major studios; however, I'm not sure the following is true:
The company's rather honest explanation for its fight with Boxee certainly suggested the problem was at a different level than with Hulu management.

Try out the Hulu Desktop to see why I don't think that's accurate. Both Boxee and the Hulu Desktop do much the same thing, except that Boxee is more open (it's open source and extendable by third parties). The BIG WIN for any company would be to become the gate-keeper between content and consumers. A company that pulls that off will know more about the customers (what they watch, what they buy, who their "friends" are) and can start to exert control over the customer relationship. Both the Hulu Desktop and Boxee will run on Windows, Mac and Linux, which is what many, if not most, set-top boxes run.

I think Hulu doesn't like Boxee because both companies ultimately want to do the same thing: Be the choke point between content and consumers. If it's just that Hulu's owners didn't like that Boxee was giving consumers a nice interface to watch Internet video on their TVs, then Hulu would not have created the Hulu Desktop to do the same thing.
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Anonymous Coward, 17 Nov 2009 @ 8:29am

Another company will come along, unhindered by these issues holding Hulu back. The major players will resist it at first, but when it becomes a household name like Hulu was becoming, and as it steals all of Hulu's attention, more and more major players will embrace it.
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Call me Al, 17 Nov 2009 @ 8:33am

Re: Re: Re:
Apple gained their leverage due to the I-Pod and MP3 piracy. Suddenly people had a way to carry thousands of tracks with them all the time and a method of getting those tracks without spending a fortune.

Apple stepped up with the I-Tunes store to present the first well designed, well publicised place where you could buy MP3s rather then just download them illegally. The content industry was faced with supporting them for a take of their profits or not supporting them for no profits.

It should be a very similar situation for Hulu but due to their owners they aren't able to use the leverage that they should glean from their tech and position. Also because Hulu exists and is under the control of content creators it means that there doesn't seem to be a space for an I-Tunes type interloper to cut in.
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Anonymous Coward, 17 Nov 2009 @ 8:35am

The only trouble with Hulu is that the public has been spoiled by Youtube, and isn't willing to tolerate any business model that would derive income.

Basically, users block ads, don't want ads in the video, don't want to subscribe, and don't want to pay in any manner. Oh yeah, they really do want the videos for free.

Don't blame the "legacy industries", blame unrealistica customer expectations.
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Trevor, 17 Nov 2009 @ 8:39am

Re: Re:
"you can't protect and maximize your content. It's one or the other".

Exactly! But it shouldn't be a problem. If you keep too tight a hold on your content, you will allocate a lot of resources to policing access and, as a result, you will produce less (and of lesser quality) new content. On the flip side, if you don't waste too much on policing your content, you'll have much more to spend on new content. Putting it in simple terms: would you rather get revenue out of 90% of little and crappy content or 10% out of a lot of high quality content. The key is to find a balance somewhere in-between that works for you and for your clients and go from there.

Unfortunately, the content providers haven't figured out their balance point and they're not even trying to. They insist that they should get 100% out of everything they have... and that's unrealistic. It wasn't happening even before the Internet and it will surely not happen after the creation of the Internet as long as there are still humans alive on the planet. They might get it criminalized, but look at how well that worked with the war on drugs or the prohibition.
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Mario, 17 Nov 2009 @ 8:50am

Re:
Well, then just let the content industries die if they can't cope with the public's demands. Or are they too big to fail as well? Should we give them 700 billion in bailout money too? We do need fry-cooks, barbers, ditch-diggers, not just studio managers and PR-people. Many of them would be making a much more honest buck by digging ditches than by doing what they're doing right now.

Do you think that no one would step in and fill the gap if the incumbents would simply go out of business overnight? If you do, you're just kidding yourself.
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Call me Al, 17 Nov 2009 @ 8:52am

Re:
I don't know about that.

I think there is a middle ground that would be acceptable to both parties. I know that I'm often very annoyed by the shear number of adverts that are thrown at me on TV these days but I don't mind a few short adverts at the beginning of something.

I also think that many content producers have forfeited a level of trust. They threw so many adverts at people that the backlash was inevitable, hence AdBlock etc. The content producers got greedy and so annoyed the customers who found a way around it. Its all about trying to find a position which works for both parties.
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Anonymous Coward, 17 Nov 2009 @ 8:55am

My biggest issue with Hulu is not enough content, especially with shows from cable TV. The providers of cable shows only give up a few, rather old, episodes. I'm more than happy to watch a couple minutes of ads at the beginning of a show. I'd be willing to pay monthly if Hulu had enough content to replace my cable service. But at the end of the day Hulu only scratches the surface of what I am looking for. Greed is the real issue here.
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rogozhin (profile), 17 Nov 2009 @ 8:56am

Re:
i don't know that people are "spoiled" by you tube. i am actually spoiled by hulu. i can watch shows on my 42" tv at 480p (which looks great from about 6-8 ft away). blow up a you tube video to full screen, and it looks like crap. if i want to watch funny clips of kids hurting themselves, i go to you tube. if i want to watch TV, hulu is pretty damn nice. i sincerely hope this is not the beginning of the end for them...
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Derek Kerton (profile), 17 Nov 2009 @ 9:57am

Re: Re:
Better tell this to the people at the Golf channel and E!...already owned by Comcast.
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Jason, 17 Nov 2009 @ 10:00am

Re:
Exactly!!!!! Thank you!!!!

ATTENTION MEDIA EXECS:

Despite my general opposition to the concept of copyright and other IP, despite my feeling that I should be able to share information however I choose, EVEN SO, I STILL PREFER TO VIEW AD-SUPPORTED CONTENT ON HULU BECAUSE I APPRECIATE THE VALUE OF A FAIR EXCHANGE.

AS LONG AS HULU DOESN'T SUCK(which perception is going to vary within your audience), then I'm happy to sit through your 15-30 ads, I even check out your long-form ads from time to time when the option arises. I have even clicked through to the website when the ad was interesting.

BTW it doesn't seem like you care when I click "Dislke Ad," such as when I'm watching cartoons with my kids and you show ads with naked women in the shower or graphic violence or worse those damned PETA ads.

Tip: If I click dislike, then you are wasting the opportunity to sell me something else when you continue to show the same ad over and over.
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Jason, 17 Nov 2009 @ 10:10am

Re:
Bullshit. There's no point in blocking the ad, and nobody I know does it, because honestly it's more interesting to watch a new ad than to watch a black notification screen ticking away.

The ads are significantly shorter than regular TV ads by half. There are fewer per show, and they often give you options for how you view the ads. Just because you don't understand the opportunity they have to make something great doesn't mean it isn't HUGE.
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Trevor, 17 Nov 2009 @ 10:21am

Re: Re: Re:
Yeah, but the Golf channel and E! are relatively niche, if not outright niche channels. NBCU is not the Golf channel and E!. We're talking about a completely different ball game here.

Let's put it this way: I don't see Comcast flipping out about someone streaming a Golf channel show through JustinTV. Quite the opposite, they might actually be happy for gaining some more exposure. On the other hand, I do see Comcast treating the next Olympic Games exactly like on NBCU did with the last ones. The difference is that now, unlike NBCU, they also own the communication infrastructure which would make their grip on the broadcasts even stronger... so much more that the term "broadcast" starts to lose its meaning.
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Danny (profile), 17 Nov 2009 @ 10:54am

Is anyone from CBS reading this?
I do hope someone from CBS happens on to this discussion; here is my story.

I used to be addicted to CSI (Las Vegas). Hated to miss it. I was travelling in Europe last winter and figured I would use Hulu to keep up with CSI while away. I found, when I tried it, Hulu checked my IP and wouldn't work for me in Europe.

So, I missed a couple of episodes.

Somewhere along the line, seeing every CSI episode became less important to me. The shows--when I see them--are still great (I like the character that replaced Grissom), but I am less addicted now. And I miss about half the shows.

This isn't a boycott; this isn't a statement that I have some sort of "right" to Hulu. It is simply me recounting that you had me every Thursday night, but you let me break my addiction and now you don't have me.

My data point suggests that letting me view the show from Europe would have been a good thing for you. Perhaps you have other data points that suggest otherwise.
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Todd Loren Sinclair (profile), 17 Nov 2009 @ 11:09am

Re: users don't want to subscribe, and don't want to pay in any manner
Of course they don't want to pay .. Why would they ... you can get HDTV free over the air in large metropolitan areas with an antenna ... and the internet certainly is just a broader range antenna .. We certainly already do pay for that ... Plus consumers already pay for TV by the inclusion of commercials in the programming ... Why we they pay twice?
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bob, 17 Nov 2009 @ 11:11am

Hey Look
If I miss a show I like I just torrent it or find it on one of the file sharing sites.
I tried HuLu but it's just not as compelling as finding the content I want to watch with my DVR or other wise online.
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Rick, 17 Nov 2009 @ 11:23am

It is good
I hope it fails, then the next one and the next one. Then maybe we can finally get a solution that we (users) want not the content creators or distributors.
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Anonymous Coward, 17 Nov 2009 @ 12:18pm

Re: Re: users don't want to subscribe, and don't want to pay in any manner
Todd, they don't get HDTV for free, they get it without specifically pulling out of their pockets. But those broadcasts are ad supported, with your typical hour having upwards to 15 minutes of commercials.

On Hulu, there is an uproar even over the commercials. I am certain that few users would actually watch the videos with 15 minutes of commercials per viewing hour.

Consumers like Hulu for time shifting, they like it for wherever whenever use, but they don't want to pay even with their attention.
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batch, 17 Nov 2009 @ 12:42pm

Re:
Why should consumers be expected to watch 12+ minutes of annoying propaganda crap for each "hour" of content? Hulu has already shown that fewer ads translates to more people paying attention and higher rates for those ads. As soon as that changes is, not coincidentally, when the service turns to garbage.
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Jason, 17 Nov 2009 @ 1:14pm

Re: Re:
*15-30 second ads
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Jason, 17 Nov 2009 @ 1:42pm

Re: Re: Re: users don't want to subscribe, and don't want to pay in any manner
The story goes that Winston Churchill was seated at a luncheon next to Margaret Thatcher once shortly after she was elected to her first office in Finchley.

The bright young politicienne quickly stood out in conversation, and so it happened that Churchill turned to her and flatly asked if she would sleep with him for a million pound sterling.

Not to be done in, she instantly masked any feeling of offense and quipped back, matter of factly, "Why of course, a million quid is a million quid, after all."

"Then would you sleep with me for fifty pence?," he asked.

"Absolutely not, and I don't care who you are, sir, I will not be called a whore," came the calm reply.

To which Churchill rebutted, "Madame, the fact has already been establish, we only negotiate the price."

-------------------

"I am certain that few users would actually watch the videos with 15 minutes of commercials per viewing hour."

Well yes, but most anyone will watch when the ads are less than a minute/hr.

Hulu doesn't need more ads, they need to command a higher price (hopefully from their advertisers).
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Glenn, 17 Nov 2009 @ 5:04pm

If you can't beat 'em, buy 'em out.
Hulu, as much as anything, has been a very good example of a la carte programming (minus the "buy" part of "buy what you want and not what you don't want"). As such, you know that the "cable companies" are not going to be in favor of anything that helps Hulu go forward as it's been going (because they just hate giving customers any choice but the ones they want the customers to have, namely, few and none). There are value-added options/features that can still make Hulu worth paying something for, but not a lot. I guess it'll be interesting to see just how much Comcast can screw up Hulu to make it a place no one will want to go for content.
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Christopher Estep, 17 Nov 2009 @ 5:19pm

Hulu and Limited Commercial Interruption
Hulu *does* air most of their content (in fact, almost all NBCU channel content, including SyFy/SciFi) with extremely-limited (compared to broadcast OR cable) ads (in fact, in most cases, the commercials that are there are not only limited in length, but are from a single company). For the SyFy content, Intel is the largest single sponsor, followed by GM, with Unilever a close third.
(Intel also leads as a sponsor on Hulu's content from NBC itself.) However, the issue that a lot of the complainers have is that they see Hulu as an alternative to basic cable (or satellite) MINUS the ads (basically, VOD via the Internet), when that's not the intent of Hulu's owners. That means that sites like Hulu have a perception problem.
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nraddin, 17 Nov 2009 @ 6:08pm

remember itunes?
Remember how the content owners killed it because they had all the power and would just stop it from putting content up on it? Remember?

Hulu has the power here, even if it's owned by the content guys. They are not so dumb as to think that a company making money for them should be shut down. If they are, it will quickly be replaced with something they can't control.
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Anonymous Coward, 17 Nov 2009 @ 9:14pm

Re:
I guess Hulu's users are imaginary, then?
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another mike, 18 Nov 2009 @ 9:30am

never again
I've already dropped cable TV in favor of Hulu and other internet video. Even if the legacy media execs get all such services shut down so that only their obsolete distribution is available, I will never start paying for cable TV.
You can have my streaming video when you pry it from my cold dead router.
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