Hulu CEO So Careful Not To Upset Cable Companies, He Might Just Destroy His Own Business

from the nice-work! dept

Wed, Jun 30th 2010 2:42pm — Mike Masnick

A year and a half ago we questioned whether or not Hulu could really survive, given the rock and a hard place situation it had put itself in by being owned by the content rights holders, who wanted to limit what Hulu could do in competing against the rest of the online world. This limitation by its owners was quite obvious in the recently released subscription package that felt wanting.

Now, Hulu's CEO, Jason Kilar -- who, it should be noted, has always appeared to fight for consumer interests against the demands of Hulu's owners -- has come out and said, quite clearly, that Hulu is not trying to "kill" cable. In other words, he's signaling to the world quite blatantly: Hulu is unable to do the one thing it needs to do to be a successful business.

If Hulu were a truly independent business, the main focus of that business would be to flat-out disrupt the monopoly cable TV business. That's a huge opportunity. But, of course, Hulu's owners don't want that, because they're in this neat symbiotic relationship with the cable companies, where those cable companies keep paying more and more money to the TV companies just to carry their shows. So they don't want to upset that business model -- even if it's incredibly anti-consumer. So, because of that, Hulu can't do the one thing it needs to do. It's telling, by the way, that the only people in our comments, who thought that Hulu's subscription offering was a good deal, were those who had or were planning to ditch cable. And here comes Hulu admitting that it's not designed to help those people. Yikes.

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Filed Under: cable, internet, jason kilar, strategy, tv
Companies: hulu

31 Comments

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Dark Helmet (profile), 30 Jun 2010 @ 2:50pm

Hm...
"If Hulu were a truly independent business, the main focus of that business would be to flat-out disrupt the monopoly cable TV business."

I've always wondered why there wasn't more of an effort by someone with the capital to spend to begin creating the first real internet television "network". Create some REAL programming (I'm thinking maybe even pick up a good but cancelled show or two) and just market the SHIT out of it. First to do it right gets to be the Google of internet TV....
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Anonymous Coward, 30 Jun 2010 @ 2:56pm

And that is why Comcast/NBC merger is a mistake and should never be allowed.
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Anonymous Coward, 30 Jun 2010 @ 2:58pm

Nice write up, Mike. I'm glad to see that they'll at least admit that what consumers want is in conflict with the existing system many of us don't want.

So the real trick is to start a Hulu-esque site independently to actually do what Hulu appeared to be trying to do. Not that it would work without the cooperation of the very corporations who don't want it to work. Catch 22 seems to be their favorite play in the book.

People need to vote with their wallets on these issues. If you don't like the system, don't pay for it. Paying for it anyway simply because there are no alternatives is just going to incentivize the continued watering down or outright refusal to provide the alternatives we do want.
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Anonymous Coward, 30 Jun 2010 @ 3:00pm

...Jason Kilar -- who, it should be noted, has always appeared to fight for consumer interests against the demands of Hulu's owners...

That should have been "...pretended to fight...".
His actions never quite seemed to match his words.
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Anonymous Coward, 30 Jun 2010 @ 3:02pm

Re:
Not paying for it is not that simple when you have oponents that can pass laws outlawing alternatives that are legal now.

They do that creating unbelievable high parameters that only a few would be able to satisfy.
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Fletcher, 30 Jun 2010 @ 3:12pm

Re:
"So the real trick is to start a Hulu-esque site independently to actually do what Hulu appeared to be trying to do."

Uummm.... don't they already exist?

*cough* tvlinks *cough* project free tv *cough*

Pardon my cold *sniff*
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jjmsan (profile), 30 Jun 2010 @ 3:20pm

Re: Hm...
I think anyone tring this would need a 5 year plan and a dedicated budget. !0% for developing the business model and 90% and five years for the court battle with the current business holders to be able to execute the model.
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Keven Sutton, 30 Jun 2010 @ 3:22pm

Re: Hm...
I'm seeing "Dark Helmet Enterprises" --- with your host, the Coal Chapeau himself, DH!
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OldGeek, 30 Jun 2010 @ 3:39pm

Re: Re:
You should really try things before you offer them as an alternative. TVLinks was shut down in 2007, and Project Free TV is nothing more than a link farm to sites like Hulu. All you managed to do is show the world your an idiot.
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sehlat (profile), 30 Jun 2010 @ 3:47pm

Old Saying
"If you're not in business to cut your competitor's heart out and eat it, you're not serious."

Still true.
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sehlat (profile), 30 Jun 2010 @ 3:48pm

Re:
Not paying for it is a good option. My family has "movie night" once a week via Netflix and haven't had Cable since... since... (internal search engine 404)
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David, 30 Jun 2010 @ 4:16pm

Re: Re: Re:
All you managed to do is show the world you're an idiot.

FTFY
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chrobrego (profile), 30 Jun 2010 @ 5:56pm

You Nailed It
The TV industry is putting their fingers in the dyke, but it's already too late. My entire extended family has already cancelled cable and satellite and relying on the internet and over the air broadcasts via an antennae.

Hulu can be THE player but they are walking the middle road and not satisfying anyone.

Hulu Plus is a sad joke until they start adding actual value -- ie. all the shows available on the desktop PLUS more good shows with some cable offerings.
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chrobrego (profile), 30 Jun 2010 @ 5:57pm

Don't worry. Hulu is finished. Here comes Apple.
Apple is rumoured to be going big on TV and they have $55 billion in hard cash to do it.

Hulu's days are numbered since they are acting like such wussies.
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GSA, 30 Jun 2010 @ 6:17pm

Dear Time-Warner Cable
Dear Time-Warner Cable,

You are a dumb pipe; please start acting like one.

- Your customers.
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jeff (profile), 30 Jun 2010 @ 6:19pm

When ESPN becomes available ...
As soon as I can get ESPN on the Internet, that is college football games, I'm done with cable.
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Anonymous Coward, 30 Jun 2010 @ 7:00pm

Hulu has always been destined for failure, they are attached to a sinking ship.
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Anonymous Coward, 30 Jun 2010 @ 7:17pm

hulus ceo realizes something that will rarely get discussed here: without wide cable distribution and the income that comes with it, it is unlikely that he would have any product to work with at all.

see, hulu is a reseller, pushing other peoples content. quite simply, there is no reason for the networks to push hulu over cable and sat distribution, because there is no financial bottom line reasons to do it. cable is an income creator on a mass scale. destroying it would destroy one of the steams of revenue that the networks need to be able to produce the content to start with.

disruptions has to come from a third party with nothing to lose. hulu disrupting cable would be akin to the networks shooting themselves in the head. i know, some here would like that, but in the end, there is no business model here that gives the networks the same bottom line.

mike, for an mba, you really, really, really miss a bunch.
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Hephaestus (profile), 30 Jun 2010 @ 8:33pm

Re: Hm...
Go the third way, the middle ground, be like them but unlike them. Use YouTube allow free use of your series videos for recomposition and free viewing. Create a really successful CGI cartoon series. Then Lisc it to Cartoon network and network stations, sell DVD's while they are still in existance. Sell they show on iTunes. Merchandise the crap out of it. Then when competition happens from the current Studios trying to compete by entering the same space as half a million people doing the same thing. Walk away laughing and buy an island.
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Hephaestus (profile), 30 Jun 2010 @ 8:44pm

Re:
"And that is why Comcast/NBC merger is a mistake and should never be allowed."

Like RIAA, ASCAP, and the record labels. How is the money going to flow? Having NBC under wing will reduce costs but only in the short term. As advertising goes to more and more efficient online, there in increased competition from other sources, the cost of production in hollywood continues to increase, and the ideas for shows get ever worse its a failure waiting to happen.

To use corp speech "there are synergies that will make this a successful merger. It is another time Warner AOL deal. Yeah great merger just like NewsDay and Cablevision.

On a lighter note go to google and type "newsday and" it comes back with ...

"newsday and obituaries" as a the only selection
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Jay (profile), 30 Jun 2010 @ 11:03pm

And this is why Netflix is going to surpass Hulu.

It's sad... Hulu surpassed Veoh and Youtube by being the only one to really be on board with the big boys.

But it's that very "synergy" that is going to make something else huge. It began when they started taking down older episodes when "permission" ran out. Then it's the subscription.

Quite frankly, they need to give the big boys their money back and say they want their stock so they can go indie.
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Anonymous Coward, 1 Jul 2010 @ 4:32am

Re: Don't worry. Hulu is finished. Here comes Apple.
People will tolerate ads to pay for TV. Few people will pay $1 or so per episode when free stuff is being broadcast 24 hours a day.

I think Apple will need to embrace ad revenue for that to work.
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Dark Helmet (profile), 1 Jul 2010 @ 6:22am

Re: Re: Hm...
I hear what you're saying....but I think the problem is branding. The reason I think coming up with an internet television "channel" (i.e. website) is important is because if you put it on YouTube, in the mind of the consumer, it's a YouTube product. Same w/iTunes.

I think you can do better if you have a dedicated site for online television. In fact....I'm immensely surprised that Google hasn't attempted this....
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jsl4980 (profile), 1 Jul 2010 @ 6:35am

Says one thing, does another
The CEO of Hulu can say whatever he wants, but Hulu is absolutely in a position to legally replace cable. You can download/pirate any shows and movies you want for free. Hulu's subscription service gives you a similar opportunity legally.

This little petty attack on a sound byte is pretty ridiculous. Hulu is a company that wants to make money. If Hulu can make enough money they can get more clout with networks and then they can admit to challenging cable monopolies. Until that time they gotta lay low.
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Chris Pratt, 1 Jul 2010 @ 9:03am

Party Lines
Now, I'm sure there will be a good deal of strain on Hulu walking the fine line it has to walk, but ultimately the CEO's statement hear is pretty meaningless. It's like when CNBC interviewed all those CEOs whose companies plummeted like rocks later in 2008. They all said their companies were in great shape, profits were up, etc. ad infinitum. The truth is that they couldn't say anything else, because had they come out and told the truth, their stocks would tank for that reason alone - a type of self-fulling prophecy.

It's virtually the same here. Hulu's hands are tied publicity-wise. Even if they sole mantra is "bring down big cable", they can't *say* that.

That said, Hulu will surely remain limited to protect big cable's interests. However, that this is a fatal flaw is debatable. True, the limitation detriments their ability to push the service to where it should be, but at the same time, no one else can either. The relationships Hulu has with content producers is extremely hard to come by, and having them as de facto partners actually prevents any sort of true competition to Hulu.

The moral of the story: Hulu will be just fine; consumers, as usual, get the shaft.
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AnonCow, 1 Jul 2010 @ 11:11am

Hulu has never been relevant. Their ownership has created a crippled and toothless bastard stepchild.

Nobody is afraid of Hulu, nobody expects Hulu to define their space, and the structure of the company insures that nobody at Hulu is doing anything even vaguely creative.
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another mike (profile), 1 Jul 2010 @ 1:05pm

Re: Hm...
You aren't watching YouTube series like The Guild or even Is It a Good Idea to Microwave This? The Machinima channel has dozens of good series like Arby and the Chief and Dude, Where's My Mount. Those are just some of the top of my head. If you went looking I'm sure you could find something you like.
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another mike (profile), 1 Jul 2010 @ 1:07pm

Re: Re: Hm...
OFF the top of my head. off.
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DanVan (profile), 4 Jul 2010 @ 12:29pm

I will not pay for this at the moment as they do not have enough shows to warrant the $10 a month and Netflix suits me just fine.

If they add more and cut the price, maybe.....I doubt they will see THAT many additions
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Eugene (profile), 30 Aug 2010 @ 6:20pm

Re: Hm...
The catch is that about a million people have tried just that. Almost all of them have failed because monetizing content on the internet through advertising puts you at such a deeper disadvantage than doing it through TV. Since advertisers *know* that websites get exact information about who watches, when, for how long, and from where, they're able to put a lot of pressure on them to meet specific demands. That's a ton of power in the wrong hands.

The sites who are still in the game (the "funny or die"s of the web), have survived not from any user support but through the same deals that have kept Hulu afloat. In other words, in order to succeed here, you have to work with the people you're trying to displace. Which means - much like what Hulu is learning - you'll never displace them.

That is...until someone who's able to wrap his or her head around this ridiculousness comes along and sets up a new paradigm. Could happen. I think it would need to start with a reliable way to necessarily obfuscate website viewer numbers, not just from the public, but from the site holders themselves. Then you can start over from the top down, the way TV does it with Nielsen boxes, which only represent about 1% of the TV watching public. Compare to something like Quantcast or Google Analytics, where installing the code onto your site gives you a representation of 100% of the people viewing the site.
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Eugene (profile), 1 Sep 2010 @ 3:28pm

Re: Party Lines
Even if they sole mantra is "bring down big cable", they can't *say* that.

It would be nice if that was true. It could be, I suppose, but the intent is worthless if the execution can't be carried out. At the moment, there's not indication to me that they have the means and the will necessary to do so, either now or in the future.

Meanwhile, the thing about Hulu's "relationships" is that they're all with companies that are MUCH MORE POWERFUL THAN THEY ARE. That's not a level relationship. Or even a climbable relationship. The networks have a little to gain by pulling Hulu's strings and a little to lose if it fails; Hulu has *everything* to gain by allowing their strings to be pulled and *everything* to lose by going against those partners. No matter how much money they make, Hulu will never even that playing field.

So the idea that Hulu is safe just because they've partnered with all these guys is pure illusion. If Hulu, at any point, starts to look uninteresting to the networks (or something prettier comes along), boom. They're out on the street. No question.

I mean, consumers get the shaft either way, but Hulu's is full of just as many holes.
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