interesting Hulu article in WSJ today

[westsider]

http://online.wsj.com/article/SB123681820436902703.html

What is interesting is not the 'Hulu Friends' announcement, which isn't exactly groundbreaking... but these few lines that show some insight into Hulu's careful dance between content providers and cable operators:

"By underscoring that the site is about providing entertainment on the computer, and not replacing television, the new social-networking features also could help ease concerns about Hulu's potential to undermine the business interests of TV networks and cable operators.

Cable operators pay billions of dollars a year to media companies to carry their programs. But many of these companies fear the availability of free online video could eventually encourage people to cancel their cable subscriptions, hurting both cable operators and the companies that depend on their fees."

interesting, no??

Hulu.com therefore needs to convince content providers, who need to placate cable operators, that Hulu.com does not cannibalize the cable audience. Their apparent pitch is that Hulu.com increases the audience by allowing consumers to watch programming when they are away from/can't access their TVs...

Whereas Boxee is more about the user's freedom of choice (of time, content, medium, and source), which is the brilliance of the product. I believe, though, that the cable operators see this as much more of a threat so they probably put pressure on NBC/Fox to kill Hulu on Boxee.

However, I can't get away from the fact the most popular shows on Hulu.com are all already given away for free via over-the-air broadcasts anyway! In my personal experience OTA HD quality is flawless as is...

And most of us are beholden to cable companies for high-speed internet (no FiOS here unfortunately....) for the moment anyway...

this battle is going to get very interesting... I think it is going to make the Napster dispute a few years back look like a mere squabble...

Sorry for the long post... just thinking 'out loud'...

Love my Boxee (and Hulu RSS) on ATV... keep up the good work.

[atomic1fire]

I don't think the possibillity of torrenting tvshows with boxee really helps boxee in the
"hay hulu we r all buddys here" department

[jtv]

Umm...

"entertainment on the computer, and not replacing television"

But my television *is* a computer!!?? What's the difference?

[glitch82]

To us there's no difference between both mediums, except convenience. To the TV networks, their sponsors, and cable operators, the difference threatens the essence of how they've been making money for the last 20 years. And I don't think they can see a way to continue to make the same kind of money they've been making. Here's why.

The economic foundation that television was built is very rigid, in the sense that TV until recently was a service that can be programmed and delivered to viewers in a recurring, serial fashion. The internet by comparison is a much more parallel, uncontrollable medium. The idea of putting a monetary value on the number of seconds a person sees a brand or logo during a show, at a certain time everyday, is being rocked hard by a generation that's opening 20 tabs in Firefox and bouncing around like 10 seconds ago is 20 seconds too late. Blurring the distinction between cable TV and the internet threatens the very fiber of the old model. Cable TV was a boom era for the networks.

Your cable TV service is a very comfortable business model for cable operators, because they know you're always going to pay $99/month for a certain package. It's a comfortable business model for the TV networks, because they know that with that guaranteed income for the operators, they can sell licenses to the operators at a consistent profit margin, regardless of the content, because you don't really have the option of only picking the stations or shows you like.

Suddenly, that internet package that was first offered as an add-on to your cable package is now overtaking the primary service. The problem is that back when your cable company told you that you can get unlimited internet for only $49/month more, they had no idea that in only 12 years that service might actually offer more TV shows in one month than you can actually watch on TV in an entire year. So, as people realize they can watch or download their favorite shows on the internet, they cancel their old fashioned TV service that has all the shows and stations they really don't even care for.

Well, that sounds like nirvana for the consumer. The problem is, the $49 a month you pay for internet isn't really as great to the operators, in the grand scheme of things, as the $99 you were paying for TV. What was supposed to be additional income from the use of the same technology has now been cut by 66%. To make things worse, initially they were sending digital internet side by side with the analog TV signal. Nowadays, they are using more advanced routers and switches with broadcast/multicast capability to send digital TV, which is a very definitive amount of bandwidth that can be measured and appropriated. But, what the hell, now you're asking them for a unicast download of every high definition show, multiple times, at will, no schedules, no way for them to really capitalize on it, and what are they going to tell the networks? They'll have to say, sorry, either you foot the bill for some of this increased traffic or we can't afford to carry your shows anymore, we're spending a fortune on internet infrastructure, plus everyone's canceling their TV service anyway.

The networks, now threatened with the loss of that economic boom that cable TV gave them 30 years ago, find themselves in a bit of a bind. They already know their shows are being shared on the internet, how can they expect to actually convince advertisers to pay more money for advertising in a medium that we all know shares a 2 second attention span for the average viewer? That kind of money potentially will not get them the same billions they were getting from operators and sponsors combined. At least, not in anyway they can conceive of at the moment.

The reason Hulu is working as a business model is because it's supplemental income on a non-tangible product. I don't think companies like NBC and FOX can sustain themselves in their current form and with their current structure if they were to lose a substantial amount of the income they get from cable operators. They'd have to adjust to a market that has a smaller attention span, one that is much more critical of creativity; a market that essentially can make you or break you in 15 minutes, and one which is potentially threatening to the rigid foundations they spent the last few decades building. The threat of the internet lowering the value of their content really is scaring the shit out of them. So they will never willingly give up pursuing television as a separate medium until they're absolutely forced to, and by then you'll see massive restructuring, huge cuts, and massive layoffs. The solution would obviously be to dissolve these entertainment channels into smaller companies that are more self-sustainable on a medium as diverse as the internet.

So to recap:

- Cable operators would lose out on another service they have counted on you having.
- Networks would have to totally rework the way they generate profits from their shows when they lose the cable operator fees and huge ad revenue.
- Networks are also faced with direct assessments of ratings quality from the viewers, versus perceived viewership companies like Nielsen, where the figures can be consistently distorted to influence ad revenue. They now actually have to make shows that consistently don't suck in order to compete and generate profit.

[lowgatl]

Umm...

"entertainment on the computer, and not replacing television"

But my television *is* a computer!!?? What's the difference?



Exactly, just because you choose a different way to view video content on your display doesn't mean you're not watching television, it just means you don't want to pay to subscribe to tons of garbage channels that you will never watch.

[tnn]

there was a time that few people also couldn't except that world processing on computer would replace their type writer.

it's called revolution. the cable company must accept that computer screen, tv screen are not different.

I've been using my LCD TV as computer screen for 2 years. all HD TV nowaday have either DVI or VGA input... for a good reason.

I love hulu if it's only on boxee. (don't have to get up and click the mouse)