Tying Hulu to a Cable Contract Is the Stupidest Idea Ever

I think in the end cable operators are going to have to resort to "ala carte" sales of it's broadcast channels. Holding off for decades, forcing subscribers to sign up for hundreds of unseen channels, is just making consumers mad.

Seeing cable bills approaching $100 a month, what's the best choice? Get rid of cable and go to Netflix or Hulu. 

If and when you can buy a channel for a few bucks a month and pick your favorites, customers may come back to cable. Cables' only real value seems to be in the fast internet service, not it's television channels.

Hi Folks:

Here's another post; this one from PaidContent on why Cable should stick to Broadband, oh and thank Netflix while it's at it. :-)

Key point:

...a case can be made that the cable industry has a better future in providing broadband services rather than TV/video bundles. 

Folks,

This ties into this story and the one I posted last month on Comcast's unfair data cap. Ars Technica reports Sony is holding back on launching a new streaming video service until it gets clarity from US authorities on Comcast's data cap. 

Key quote from Sony's Michael Aragon:

"These guys have the pipe and the bandwidth," he said. "If they start capping things, it gets difficult."

mhhfive:

I think you're misuing the term conflict of interest. A conflict occurs when one part of your business conflicts with another, so a cable company whose interest is selling cable subscriptions conflicts with NBC-Universal's goal of selling more content.

I don't agree that content owners want to preserve the old model here. They want to sell their content to as many entitities as possible and to make as much money as they can on their investment in producing that content.

In the old days before streaming, content producers would syndicate old shows. Look at Law and Order. It's been on TV in one guise or another for over 20 years and it's on all the time across multiple delivery channels (on conventional television outlets). Today, that market has expanded beyond lucrative syndication. 

Netflix and other outlets need content, so they are willing to pay handsomely to get access to shows and stream them to their customers. The content producers are always looking for new outlets where they can sell the content. Streaming companies like Netflix give them that.

I think Netflix does suffer from some of the same conflicts of interest -- content owners want to preserve their existing business models and to make it as expensive as possible for upstarts to gain access to content that might pull consumers away from more traditional media outlets. Netflix is feeling this pain and had to raise its prices and try stupid things like Qwikster to see if it can avoid these content licensing nightmares.

The conflict is that content owners want to create expensive new licensing schemes for any new way to deliver content -- streaming is just the latest new method. Every content delivery service has to deal with renewing their content licensing -- so if Amazon doesn't think it needs to deal with outrageous licensing prices or requirements, it's in for a big surprise. (Just when Amazon's streaming movie rentals are about to get really popular, you can bet that the content owners will try to extract a pound of flesh...)

KIM:

Or Verizon's requirement that you buy a land line to get FIOS Service. It's just a dumb idea by brain-dead marketing people to keep the old model going. Which of these things is not like the other?

And how about the UltraViolet scheme to tie ownership of content in the cloud to ownership of a physical DVD?

When will Big Content finally get it?  We don't want the boxes and wires.

Mhhfive:

Does Netflix have that same conflict? Does EPIX or Amazon Prime? There isn't an inherent conflict in running a streaming service even if you are a content owner. The conflict comes into play when you have infrastructure providers involved. If you have a streaming service, you start with content because good content drives audience, but that would mean you need deep pockets to buy the rights to the service. There will be plenty of players filling the void, trust me.

mhhfive:

That doesn't even make sense (even though I know you're joking) because it's tied to accounts, not the account holder. We have several people using our accounts for instance and we're not always in the same place when we do it.

The problem with creating a Hulu-clone is that any Hulu-like service will run into the same content-licensing conflicts of interest. The networks that own the most popular TV shows aren't going to want to feed a startup that might eventually eat their lunch. 

There's also a chicken-egg problem of what comes first: audience size or content library size. Does a video startup need to have a huge video library to attract an audience -- or does it need to build up a large audience to be able to negotiate decent content licensing deals? Netflix built up its large library in a somewhat sneaky way by using DVDs and taking advantage of the copyright "loophole" that allowed it to buy DVDs and share them without getting permission. So now Netflix has both a large library and a large audience. Hulu had the advantage of being able to use content from its owners to build up a large audience, but now its owners are pulling that rug out from its feet. After Hulu, it's a good bet that content providers won't want to try to give away their content for free again....

Maybe YouTube will be able to step in here.. and use its large audience to negotiate some nicer content licensing deals. But even that is doubtful, because content owners are scared of the likes of Google and Apple eating into their business.