Hulu Owners Looking To Make Hulu Even More Useless

from the you-can't-disrupt-yourself dept

Mon, Jan 31st 2011 4:28am — Mike Masnick

It's been almost two years since we suggested it might be impossible for Hulu to survive, given that it was in a bit of a "rock and a hard place" situation. The only way for it to really succeed long-term online was to disrupt the existing TV business. Because, if it didn't do that, others could and would kill Hulu. However, Hulu is owned by the existing TV business, and that means the company can't do what it needs to do. The WSJ is reporting that NBC management is upset with the way Hulu is undercutting its current business model, and is now pushing to change Hulu entirely into an "online cable channel" rather than an aggregator and service for watching television shows. Of course, as many are pointing out, this would almost certainly kill off Hulu.

This is all pretty unfortunate. From a technical standpoint, Hulu appears to be a great service. The only thing really holding it back has been a bunch of owners and licensees who think that the path to the future is to apply all sorts of limitations on what can be done with their content. That's the exact opposite of the path to success these days. Putting limitations on content is not the solution. Enabling people to do more with your content is the solution. Hulu put in place a platform that could do that... but it's owners are choosing to go in a totally different direction, and they don't even seem to realize that they're making a huge mistake.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: cable, disruption, innovation, internet, pay tv, tv
Companies: comcast, hulu, nbc universal

54 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

rebrad (profile), 31 Jan 2011 @ 4:50am

Mistake
NBC is used to making mistakes and has a long line of mistakes over several decades. Comcast won't improve this but will enhance their mistake making abilities. Hulu is aberrant from NBC's normal business model and must be brought in line.
[ link to this | view in thread ]
codeslave (profile), 31 Jan 2011 @ 4:55am

Netflix
They'd turn Netflix into a online premium cable channel too if they had half a chance.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 5:12am

Hey Mike,

I've been watching your blog for a few weeks now, and I have a very serious question-- Has anyone ever asked you to become a thought leader? You have some real good concepts and ideas here, and to take your news to the top, you should very seriously think about being a thought leader.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 5:29am

When you get in bed with dogs you wake up with fleas.

Netflix, Hulu, Google, Microsoft, Intel and others should all band together and start producing some heavy weight shows on their own this is the only way they will get a foot on the market or they could just buy the TV networks and movie studios as anybody knows the tech industry is just 10 times the size of the entertainment industry.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 5:30am

...or invest in gaming that is interactive movies in reality.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 5:36am

RE:
Not even close... Big media and telecoms are among the biggest and most powerful organizations that exist. Not even MS or Google have the power to push them around. They will follow the recording industries lead if they have to and just start lobbying for laws that prevent Netflix and the like from existing.
[ link to this | view in thread ]
Mike (profile), 31 Jan 2011 @ 5:38am

Typo patrol:

"...others would and would kill Hulu."

Did you mean 'could and would'?
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 5:56am

Re: RE:
Really?

Why is NBC being acquired by Comcast?
How did Sony weaken opposition to their digital tape recording system? Oh that is right they bought out the plaintiff.

Intel revenues for the year of 2010 were in the 10 of billions where the biggest movie studio had a couple of billion dollars year.

BTW telecoms are not friends with the entertainment, they are the new bosses of that industry.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 5:59am

Re: RE:
Also I want to know which dumb politico will go against Intel when the army depends on it and most of the dominance of American business depend on silicon.
[ link to this | view in thread ]
Rekrul, 31 Jan 2011 @ 6:01am

The TV industry used to be about coming up with new technology to get the shows to the viewer. Now it's about coming up with new ways to prevent the viewers from watching the shows that they want to.
[ link to this | view in thread ]
Jay (profile), 31 Jan 2011 @ 6:11am

Hulu - The Business Model
Soon, the stage was set for a showdown. News Corp. had announced that Mr. Chernin, an original creator of Hulu, would leave the company at the end of June. News Corp. named Chase Carey to be its new president and chief operating officer.
Mr. Carey had a very different vision for Hulu, according to people familiar with the matter. The former head of satellite operator DirecTV, Mr. Carey was a big believer in the subscription-TV business. He worried that online video would train a generation of people to expect entertainment for free with advertising. He thought Hulu should be supported by both subscriptions and ads, those people said.

There's the problem right there. When everyone can complain to Carey about Hulu hurting them rather than they compete to get better against it, it's going to look bad all around.

Fact remains, if I wanted to watch all of the old content of a series I missed, it's as easy as a new HD with the industry missing out on my moolah.

And for gosh sakes... If they're so intent on putting out the content, why not upload it to their own site? So long as they pull it away from Hulu, I'm not going to watch it.

I've stayed away from Hulu since they put up Hulu Plus. It's just sad how much they could do to change the industry and yet the industry has a "dey took er jebs" mentality

(Yes, that says "They took our jobs". The industry is just being retarded)
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 6:13am

Re: RE:
hmm - Let's see.

Google current Market Cap: $192.28B
Comcast current Market Cap: $63.73B

Google enterprise value: $160.77B
Comcast enterprise value: $90.27B

Just one example. You're right. It's not even close. Big media are, well.... big, but tech sector is bigger.
[ link to this | view in thread ]
Mike (profile), 31 Jan 2011 @ 6:15am

Re: RE:
While what you say seems to be true, it always strikes me as incredible. Why do some industries have a seemingly massive influence over the government?
Homeland Security ignores due process to seize domains because Big Content business models would rather control the web than understand it? Then DHS actually issues a press release from a Disney office?
Sony gets the government to ignore fundamental property rights, just because their business model says (needlessly) that console owners can only be passive consumers?
These are just two examples, but regular readers here know that there are many more. The question is: why? At base, the only reasonable answer seems to be a lack of education or understanding of the issues inherent to so-called intellectual property. Aside from that and, perhaps, corruption, why else would we see the government doing the bidding of some big businesses? If we don't respond to this situation, we will see more of what we already have: legislation which attempts to make reality fit (otherwise failing) business models, and the preferential application of existing law, to the benefit of companies who choose not to adapt.
[ link to this | view in thread ]
Miles (profile), 31 Jan 2011 @ 6:18am

Control the content: lose the war.
As an anime fan, I often see many attempts at those who're used to decades of anime control fall flat when trying to "compete" with services which aren't even related to anime.

When they fail, the first response is "Piracy is killing our business!" yet not a single one of them has realized the reason why piracy does so well is because they get it by offering ad-free content encapsulated around an ad-generated business model.

Fans don't have to fumble around 20 websites just to acquire an episode laden with tons of ads because content owners think web = TV.

Hulu failed the second they put ads within their offerings. I know some people will whine about this is a "small price" to pay for viewing, but the fact remains if no one buys a single product in the ad, then they're contributing the same amount as piracy: $0.

Those who make the content never seem to be out of investors, so why would they kill any future investments by hanging onto business models which are failing across the board?

It makes no sense to me. Granted, I'm not going to rush out and buy TV on DVD to make up for loses, but I do buy products and these should be used to finance the shows with as little as a "This series brought to you by Coca-cola" (product placement nicely done as well).

After all, haven't we all paid for this stuff forever?

Now we're paying for it twice as every other channel requires a "fee" to carry.

It's this idiocy why Netflix can't stream, because someone thinks pushing a digital file to a plastic plate is different than pushing the same file into a Flash player.

Eventually, we're all going back to books because no one can afford to watch anything anymore.
[ link to this | view in thread ]
Overcast (profile), 31 Jan 2011 @ 6:19am

Oh wow, yet another soon-to-be cable channel that will be 50% commercials. Thrill.
[ link to this | view in thread ]
Matt Jones (profile), 31 Jan 2011 @ 6:19am

Re:
I read that to be "...others would(comma) and would kill Hulu."
[ link to this | view in thread ]
The Groove Tiger (profile), 31 Jan 2011 @ 6:46am

Re:
"The only way for it to really succeed long-term online was to disrupt the existing TV business. Because, if it didn't do that, others would (disrupt the existing TV business) and would kill Hulu."
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 6:48am

Re: RE:
Comcast
Total Revenue_____35,756.00_____12 months ending 2009-12-31
Gross Profit______17,819.00
Microsoft Corporation
Total Revenue_____62,484.00_____12 months ending 2010-06-30
Gross Profit______50,089.00 (HOLY MOTHER OF GOD!)
Apple Inc.
Total Revenue_____65,225.00_____52 weeks(13 months) ending 2010-09-25
Gross Profit______25,684.00
The Walt Disney Company
Total Revenue_____38,063.00_____12 months ending 2010-10-02
Gross Profit_______6,726.00
Time Warner Inc.
Total Revenue_____25,785.00_____12 months ending 2009-12-31
Gross Profit______10,602.00
Viacom, Inc.
Total Revenue_____9,337.00_____9 months ending 2010-09-30
Gross Profit______4,454.00

Yep I see who got the power(I mean money).
The good thing about greed it is that is predictable, the small people always, always get screwed.

Look at the size of the tech companies and their profits compared to the few entertainment companies out there.

How many giant tech companies are there and how many big studios, labels and TV stations there are?
[ link to this | view in thread ]
zealeus, 31 Jan 2011 @ 6:52am

Hope it doesn't go anywhere
I hope Hulu doesn't loose it's current 5-prior-episode model. I, um, know friends who used to torrent all the recent episodes because sitting down at exactly 8pm every night did not work. However, with Hulu (and Netlflix), we're now legally watching all of our television. I hope Big Media doesn't kill this golden goose, or else you'll have an entire generation that was raised on Napster go back to piracy. And has been stated here more than once, it's not a matter if piracy's legality, but rather it's simplicity. Netflix + Hulu = easy access and affordable without too many hoops to jump through. Add more hoops, and piracy becomes the easy choice.
[ link to this | view in thread ]
Sneeje (profile), 31 Jan 2011 @ 6:58am

Re: Control the content: lose the war.
I don't know that I agree that they failed when they included ads--I think that's close, but the nuance is that the failure was a lack of attention to the experience.

Meaning, given that the ads were just slapped on, and there was no corresponding value increase--it was a miss.
[ link to this | view in thread ]
Marcus Carab (profile), 31 Jan 2011 @ 7:02am

Re:
a what?
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 7:09am

Re: Re: RE:
If Microsoft or Google got seriously into content production, their bottom lines would quickly move towards that of Comcast and others. Quite simply, it is a money and risk intensive business, which is not what the big tech companies like to play in anymore.
[ link to this | view in thread ]
JEDIDIAH, 31 Jan 2011 @ 7:12am

The pain tolerance of consumer is actually quite high.
I don't think the fuss over commercials is that relevant for most people. Sadly, I think most consumers have no taste and they will go for the cheapest convenient option presented to them. Most people just don't seem to mind the commercials.

Otherwise the American cinema industry would be dead right now.

We're longtime DVR users in my houshold. So the escalating number of commercials in movie theatres is quite visible to us and tends to stick in our minds keeping us away from the cinema until we kind of forget about it again.

No. What the TV industry needs to concentrate on is making sure that content is available and is convenient. They cannot allow pirates to have the better product. The problem is that they think they can stop piracy when they really can't. This false notion will encourage them to litigate rather than innovate. That will be their undoing.

They could public DRM free torrents of shows with ads included and most people would not be motivated enough to strip the ads or seek out ad-free versions of the show.

Cheap and easy is all that most people care about.

People interested in quality are bound to dump cable entirely. Such people are more likely to just buy the relevant boxed sets and start turning their back on cable regardless of the form it takes.
[ link to this | view in thread ]
eMike (profile), 31 Jan 2011 @ 7:17am

Re: Re:
Maybe like a Glenn Beck who actually makes sense?
[ link to this | view in thread ]
TheRemains (profile), 31 Jan 2011 @ 7:29am

It's just the Old Guard protecting their routine
They don't understand the economics of opportunity. They don't see how requiring cable TV and a subscription to HBO actually limits their business and customer base.

This isn't about them making intelligent economic decisions. It's about habit and the capacity for their brains to comprehend the changes that emerging technology imposes to the standard economic model.
[ link to this | view in thread ]
KC, 31 Jan 2011 @ 7:43am

Hulu vs YouTube
I have a YouTube channel with a lot of kids/family shows on there. So you could call me a pirate if you like. But I don't care because I am making a lot of people happy with what I have put up. A lot of what I put up has no official DVD release. All of what I have put up so far is not available to legally stream anywhere. Yet I have a worldwide audience.

Let's look at YouTube and Hulu side by side for a moment.
Hulu: Restricted to The United States of America
YouTube: Worldwide

Notice the difference there? Also, apart from a couple of shows that have a song used in them that was content matched (ads appear at the bottom of those episodes), people can watch these shows on their mobile devices, such as an iPhone or iPad, if they so choose to.

And from many of the comments and PM's I have recieved, I have reason to believe that many of my viewers (1) would indeed buy a DVD of the show if given the chance (2) use YouTube for the convenicne - every show on one site - and the fact that you can rate, comment and even contact the uploader.

Let's compare YouTube and Hulu side by side again - and I am not in the United States so I have never used Hulu so if I am wrong on this next point, please feel free to correct me...
Hulu: Watch the video
YouTube: Watch the video, discuss (interact) with other viewers and possibly even the creator of the video, if you want to

I believe Mike calls this "Connect with Fans"

How's this for CwF: One of the cartoon shows I've put up has a small (and very active) community of fans who have nowhere else to go to talk about the show (besides DeviantArt) as nowhere else cares about this particular show! I've even been contacted by that show's head writer THANKING me for making the show available! And one of the show's animators has also left many comments, now sadly deleted when my previous channel got struck.

Both of them have also discussed the show and it's production with the show's fans. We got great insider stories on what was involved in the animation process. We got a great (albeit disappointing) story on how the writers had to fight the studio executives on some aspects of the show. The show, once completed, then got rejected by one of the networks who co-financd the production! Now find stuff like THAT on Hulu!

So how to make Hulu work? How about trying CwF+RtB (or, in this case, Reason to Subscribe)? Or are the studios who make mainstream adult television too scared to hear what the fans have to say?
[ link to this | view in thread ]
Marcus Carab (profile), 31 Jan 2011 @ 7:51am

Re: Re: Re:
according to Wikipedia it's either exactly what Techdirt is already doing, or some weird new-age concept...
[ link to this | view in thread ]
Jay (profile), 31 Jan 2011 @ 7:57am

Re: Hulu vs YouTube
And no links to your channel? I am disappoint. :)
Other than that, I agree that basically those in the industry are shooting themselves in the foot with backwards thinking.
[ link to this | view in thread ]
Richard (profile), 31 Jan 2011 @ 8:03am

Re: Re: RE:
The real point is that playing along with the entertainment industries can be quite profitable for the tech companies - without running the risks associated with taking over their high cost production facilities. Look at iTunes.

No point in killing the goose that lays the golden eggs. Just keep taking the eggs and when the goose dies (as it will) the corpse will be somebody else's problem!
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 8:16am

Re:
Seriously. I switch channels during commercials. I can't sit through them anymore, the repitition, the noise, the banality, the incessant interruption. Yesterday I flipped channels for half an hour and saw nothing but commercial breaks on every channel I flipped to - I missed the actual content I was trying (and PAYING) to watch!

I can't DVR every damn thing I watch on TV, kinda kills the spontaneity and makes me grit my teeth when I pay my bill. But even when I manage to see the actual show, I'm further infuriated by those banner (?) ads across the bottom of the screen, some of which obliterate a full third of it - WTF?! Is there a show I paid to watch in here somewhere?!

One channel doesn't bother me: the MGM movie channel. The picture is outstanding and there are maybe 2 or 3 commercial breaks after a good length of movie. I stay invested in watching despite the breaks because they are few and far between. If there are bottom banner ads I haven't noticed them.

Okay, I'm done bitching for now.
[ link to this | view in thread ]
Krusty, 31 Jan 2011 @ 8:21am

"Hulu Owners Looking To Make Hulu Even More Useless"

Is that even possible?
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 8:51am

Re: Re: Re: RE:
Not if they were successful.
You see, it wouldn't be Google Studios it would be a LLC somewhere that would have some profits but the focus would be in other areas for supporting them and not antagonizing it.
[ link to this | view in thread ]
Atkray (profile), 31 Jan 2011 @ 9:42am

Tech vs Media
The reason Media is controlling things instead of the Tech companies is because Media companies have wisely invested in politicians.
[ link to this | view in thread ]
Hephaestus (profile), 31 Jan 2011 @ 9:55am

It seems the networks are following down the exact same path as the record labels. With Comcast driving this forward it is going to cause them to fail more quickly.
[ link to this | view in thread ]
Patrick, 31 Jan 2011 @ 10:09am

Re:
Wtf is a thought leader? Oh that's right some dumb industry buzzword.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 10:14am

"From a technical standpoint, Hulu appears to be a great service." I argue that it had the potential to be a great service, but I could see the writing on the wall when it started actively stopping my ad-blocking, all content within series wasn't available, and there were strange and arbitrary block-out dates. It was at that point two years ago I simply went to full-on RSS feed torrents, and never looked back.
[ link to this | view in thread ]
Mike Masnick (profile), 31 Jan 2011 @ 10:27am

Re:
Typo patrol:

Oops. Fixed.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 11:12am

Re: Re: Re: Re:
Its business-speak. Which is to say, complete trash of the English language.
[ link to this | view in thread ]
BoloMKXXVIII, 31 Jan 2011 @ 11:41am

I can't see what Google is waiting for. They have the distribution channel (YouTube) and the front end, GoogleTV. They make money on advertisement. All they need to do is start purchasing/creating content themselves. Bring back Firefly and make it a Youtube subscription only offering and see how many people sign up.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 11:42am

Re: The pain tolerance of consumer is actually quite high.
Personally, I prefer convenience. I could hardly care less about the amount of commercials in Hulu. I just like the fact that I can watch a show, instantly, without hassle. I don't torrent much mainly due to the fact that waiting even just 5 minutes to download a show is way too long. I actually think that Hulu offering even more content but with more ads is a valid way to go.

In fact, most TV shows are basically set up to revolve around the fact that the consumer has a break at certain points of the show. It's actually more jarring to watch some shows without the little pauses which allow the consumer to breath a little and step away from the action.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 1:39pm

Re:
Believe it or not, Netflix does publish its own movies.
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 2:06pm

>but it's owners

"but it is owners"
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 2:20pm

Re:
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 2:31pm

Re:
Good idea, AC! That would be great! Mike should go to Thought Leader camp and get some training. While you're at it, Mike, have you ever thought about being a Free Thinker, Person of Note, or a Primary Color?
[ link to this | view in thread ]
John Duncan Yoyo, 31 Jan 2011 @ 2:51pm

Re: Re: Re:
>Maybe like a Glenn Beck who actually makes sense?

That has Oxymoron written all over it.
[ link to this | view in thread ]
Fuzz34, 31 Jan 2011 @ 4:08pm

This is all unfortunate, because now I'll have to go back to downloading torrents. Isn't that why Hulu was created in the first place?
[ link to this | view in thread ]
bob, 31 Jan 2011 @ 4:36pm

Wrongo
From a technical standpoint, Hulu appears to be a great service. The only thing really holding it back has been a bunch of owners and licensees who think that the path to the future is to apply all sorts of limitations on what can be done with their content.

No. What's going to tank it is that the content costs more to create than the service brings in. So something has to give. That either means shutting it down, paying less for content or charging a fee. If Hulu were bringing in more per viewer for the ads, NBC would be happy.

Now clearly you would like to believe that some super-radical, feel-good scheme like giving it all away with a creative commons license might save it. Balderdash. If there were a chance the revenues would pay for the creation of the content, NBC would be the first to try it. But they're not naive.

I have a hard time pointing to anyone who's breaking even experimenting with any of the potentially cool ideas that you suggest might save Hulu. Al Jazeera is limiting their release to important footage at a historical time. It's not sustainable and both you and they know it. Almost everyone else releasing free video is doing it as a come-on to lure in new viewers. The first hit is free.

The sad truth is that without limitations, people take your work and fail to contribute. Look at all of the content-farms repurposing Wikipedia content to sell ads. Look at the bloggers who take Flickr photos without creating their own. I wish I could be more optimistic about new plans to rake in the cash by letting everyone just share the video shows through some P2P network but I think most of the people would just watch them without ads. The only thing left on TV would be PBS which produces earnest shows directed at the sensitibilities of those who are willing to donate.
[ link to this | view in thread ]
Passerby, 31 Jan 2011 @ 7:13pm

Just Like What Auto Makers/Oil Companies Did to EV1
This is just like what the auto makers and oil companies did to the electric car, EV1, back in early 2000. To protect their business, the oil companies bought their threat and killed it from within.

Source: http://www.alphaila.com/articles/important_things/who-killed-the-electric-car/
[ link to this | view in thread ]
Adam Singer (profile), 31 Jan 2011 @ 8:53pm

And what will happen...
Is people won't watch the content. It's simple. Why would anyone *pay* for TV content? It's not even that good.
[ link to this | view in thread ]
cram, 31 Jan 2011 @ 10:43pm

The real reason is:

http://paidcontent.org/article/419-piracy-nearly-a-quarter-of-global-internet-traffic-says-st udy/

The pirates are killing the Internets!
[ link to this | view in thread ]
Anonymous Coward, 31 Jan 2011 @ 11:30pm

Re: Re: RE:
Looking at the profit numbers from tech companies and the profits from entertainment companies one has to wonder why it is that the margins are so low, Hollywood accounting perhaps or could it be the tragedy-of-the-anti-commons showing its face where their cost are so fragmented having to pay so much people that it make it harder for them to have big profits, that would be great proof that copyrights are no good because it takes away the ability to make money.
[ link to this | view in thread ]
Mike Masnick (profile), 31 Jan 2011 @ 11:41pm

Re: Wrongo
The only thing left on TV would be PBS which produces earnest shows directed at the sensitibilities of those who are willing to donate.

[citation needed]

You keep making this claim on various threads, and yet all of the actual evidence (i.e., out here in the real world, rather than your head) suggests exactly the opposite. More content than ever before is being created. More content creators are making more money than ever before. And they're doing so by ignoring copyright.

So, please, enlighten us why reality is wrong and your ideas are right.
[ link to this | view in thread ]
Anonymous Cowherd, 1 Feb 2011 @ 10:09pm

Re: Hope it doesn't go anywhere
"However, with Hulu (and Netlflix), they're now legally watching all of their television."

FTFY
[ link to this | view in thread ]
Tony Turner, 2 Feb 2011 @ 4:06pm

Hulu - almost useless?
I'm in Canada - Hulu is ALREADY useless...
[ link to this | view in thread ]