Feast on this paradox: The more eyeballs that video streaming service Hulu LLC wins, the nearer it steps to death at the hands of its parents. At least, that's the bizarre reality that the LA Times reports is believed by many media watchers.
Hulu’s problem: It is the bastard child of an old media threesome that included News Corp., Walt Disney Co., and NBCUniversal. When they birthed the idea of Hulu, they were driven by fear of Netflix Inc. (Nasdaq: NFLX), says Tom Siebert, a vice president at new media ad agency Digitaria. But now, he says, “They find themselves between a rock and hard place.”
Netflix is the rock, but the hard place is the pittance online ads are fetching for Hulu -- “much less than similar ads on the same programs on traditional televisions,” says Siebert.
And now Hulu is siphoning viewers from traditional TV as a generation of cable cord cutters turns off the old-fashioned TV and tunes into Internet-streamed media on demand.
From the perspective of old media, worse is coming. Hulu’s success is a threat to traditional modes of distribution,” says Monty Kosma, COO of Fandor, a streaming site for independent films. “Old media are losing their control over price, and that scares them.”
"The biggest concern for the networks is the loss of advertising revenue, or the belief that advertising revenue will be lost if Hulu is allowed to progress without some constraints or control mechanisms,” says media lawyer Torin Dorros.
Bottom line: Hulu now attracts over 27 million users monthly, but annually, it generates only $100 million apiece for its three old media owners, according to the LA Times. That compares to an estimated $30 billion that cascades into those old media companies from their traditional partners.
Hulu has pushed to raise new revenue streams. Hulu Plus, a premium subscription service available on a wide range of platforms, generates tasty income -- it will have one million subscribers at $7.99 per month by year end. But that's chump change compared to the billions rolling in the old way.
If it were your child, you might think about strangling it, too.
The pressure point is that this summer, Hulu’s rights to distribute programming from ABC, NBC, and Fox expires. So far, the old media behemoths have been slow to renew deals. Rumors fly that they want to delay availability of shows via Hulu, which would force viewers to wait weeks, and maybe remove some content altogether.
There also are rumors that Hulu’s owners may begin demanding fees from Hulu for permission to show their content, exactly as cable operators do (they pay so-called carriage fees). Right now, the owners share only in ad revenues -- they get 70 percent of the ad dollars, according to the LA Times -- but they apparently want even more money from their offspring.
But the paradox thickens: “The less they support Hulu, the more they help Netflix,” says Siebert.
If the old media behemoths chase away Hulu viewers by restricting content or adding more commercials, customers have other places to go. Netflix, of course, offers a comparably priced service at $7.99 per month, and it can play old media outlets off against each other because it is independent. Ditto for emerging services such as Amazon’s video on demand.
Rumors also are multiplying that Apple Inc. (Nasdaq: AAPL) plans to unplug Apple TV and instead offer an ambitious cloud-based video streaming service intended to go head to head with Netflix (and Amazon, Hulu, and the rest).
“In a world of online access, the less control any one big player can have,” says Kosma. “Big media companies have been successful -- but suddenly competition is opening up.”
Are Hulu’s old media parents savvy enough to recognize that they need Hulu, their stalking horse in the era of Internet streaming of media content?
You remember what happened to Dr. Frankenstein’s monster, don’t you? Will the old media companies abandon Hulu, just as Frankenstein abandoned his creation? We’ll know by this summer.
— Robert McGarvey is a widely published author and expert on social media.
What really ticked me off was what Hulu pulled earlier this year and all of a sudden shows you could go back seasons and watch were now only previews...
What really ticked me off was what Hulu pulled earlier this year and all of a sudden shows you could go back seasons and watch were now only previews...
As a former media buyer, I've heard an awful lot of "but TV was so much easier," and this sounds like more of the same.
Sure, advertisers have traditionally spent more on TV. But that's because they had no choice. TV ads were (and mostly still are) bought in huge swaths, in association with stations and shows, often across the whole country. It's hard to target TV ads, so when you buy them, you target everybody. And targeting everybody comes with a high CPM. Most of the people who see the ad don't buy the product. You live with that.
Online advertising is fundamentally different. You can target it, users can interact with the ads, and you can analyze tons of data on who saw the ads and how those people reacted. And even though online advertising is better in many ways, it's also cheaper, because it allows advertisers to surgically choose their target audiences, and those audiences often don't turn out to be as theoretically big as TV audiences. But that's just because TV audiences can't be sliced and diced.
TV is an interesting comparison to the rest of the media changes in the Internet age.
I used to pay for print news, but now I can get news free online.
I used to pay for music, but many venues allow for copying of music (illegal and wrong, but still easy and widespread).
I used to pay for information, but more an more information is available for free online.
TV is the reverse - I used to get all my TV for free. Yes there are premium channels - but ABC, NBC, CBS and FOX have been free for decades.
Today I am paying for what used to be free. I buy shows for my iTouch from iTunes and via Netflix.
So TV has the ability to shape new pricing. For the convenience of watching shows when I want them and on the device where I want them - I will pay. Even though I could turn on my TV (I still have one without cable) and see the same show for free.
The TV networks would be smart not to fall prey to free and to find the best ways to monetize!
Good point, dbergman. I for one don't mind an equal experience between TV and streaming Internet. So if NBC (for example) wants to set up advertising agreements that merge online and on-air into one fee, and they provide ads on streaming programs just like on-air programs, I'm OK with that.
The old-time media companies have not transitioned well to online. I'm comfortable with them trying to find a model that works for them AND for us as viewers.
Well, part of the problem we are seeing now is the world does not really know where it sites in regards to online media vs. TV media. We glide between them freely. In fact, on most night, I watch TV with my laptop open surfing the web watching videos. Hulu may be a bit too early for it's time. It's a great model, and I am sure they will figure out how to make money. And it will be in advetising. Let us not forget that TV is FREE, or was at least, and paid for by commercials. While we all hate it, many video sites are putting commercials int our video streams. That's the price we pay to be able to watch TV whereever and whenever we want. Can Hulu put together a package that keeps people paying them, keeps advetisers, and keeps there suppliers happy? They are going to have to bevause the market they are in is still undefined and if someone else comes up with a plan faster and better, we know the viral nature of the internet means that service can go viral and within a day, they could have market share.
Boy, this is scary to read. I hope they find a way to make it. I have a ton of stuff cached on Hulu Plus that I'd like to watch, mainly old stuff, not new stuff.
What's interesting to me is how few shows I really need to watch on television. I watch Idaho Public Television shows, and they're all available online. I watch Hawaii Five-O and The Office, which are available online immediately, and House, which is available a few days later. I usually watch a few episodes in a chunk when I have time. The Mentalist isn't available online, and guess what -- I don't watch that one any more, even on television. Too hard to get caught up if I can't see it on the Internet when I want to.
Okay, at that price point I agree it starts to sound interesting - especially if there's something like the Amazon one-click interface for signed in users and delivery is more or less immediate. But I bet 99 cents sounds like a horrible price to the parents for their beloved content.
That's why the cost of non-physical goods has to be pretty low. For Hulu, a lot of items would have to be around 99 cents, less than a pack of gum.
Here's where lazy plus a low price starts to get interesting though: What if you and a friend were both Family Guy fans. He gets a ringtone of Peter saying "OOOooow", from the gag where he was kicked in the shin and says "Ow" for about two minutes straight. It's hilarious in context, so you decide to one-up him by getting Quagmire's "Giggity" as your ring tone. He gets a frame of animation to use as his wallpaper, so you buy one of your favourite moment.
Then you both get bored... and grab some other obscure sound effect as your ring tone. It only cost 99 cents, so why not? From Hulu's perspective, they're getting extra milage out of every single episode... not only can they grab commercial revenues, but also profit.
(Now... have this take place at a comic book convention and watch the sales.)
Admitably, the catch is easily and quickly converting content into sellable pieces, especially for older content which was never meant to be distributed that way. Even then, lazy can be used to an advantage by allowing advertisers to actually sell their products alongside the content itself. But then again, wouldn't a commercial that had the message of "Family Guy on Hulu, brought to you by Scope!" work better if it also said "And if you click here you can buy it right now for 25% off!"?
Convenience v. cost. Yes, people may well be lazy when it comes to chasing down pirated content, especially if there are quality issues; on the other hand, there may be quite a low ceiling to what they're prepared to pay. I've been thinking about this in relation to the New York Times paywall. Badly in need of patching, there are currently a number of ways to game it and a number of sources of pirated Times content. If the subscription was cheaper, I am sure people would rather just relax and pay. But the current price seems pitched just about the point that gaming and piracy begin to seem attractive.
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Businesses are cutting the landline tether surprisingly quickly.
"The rise of the cellphone-only worker is happening at lightning speed," wrote David Cameron, president of the IT services firm Rhode Island-based Conduit Systems, in an email.
The drumbeats are loud. Google, reports filter out of Asia, is preparing to manufacture its own Chromebook, to be branded Google and/or Nexus.
The blunt question: Is this dumb or smart on the part of the Mountain View, Calif.-based company?
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Netflix seemed to be a threat to all of TV, but with the current quarterly earnings report, it sure doesn't look as if that's true now. Netflix really proves that even Internet viewing of video isn't immune to profit and other business issues. This is a lesson we need to learn if we want a viable online video model.
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While NFC's original goal was to enhance mobile commerce applications, it is finding its way into a number of other uses, which is creating both opportunity as well as challenges for IT departments.
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Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
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Expert Integrated Systems: Changing the Experience & Economics of IT In this e-book, we take an in-depth look at these expert integrated systems -- what they are, how they work, and how they have the potential to help CIOs achieve dramatic savings while restoring IT's role as business innovator. READ THIS eBOOK
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