Hulu model in flux

It appears that there is talk of changing Hulu’s current model. Instead of free-for-all streaming of content, they may be moving toward having viewers use their cable subscription credentials for authentication. In other words, Hulu will still be free if you have a cable subscription.

This is an obvious swipe at cord cutters, who immediately reference Hulu and Netflix when discussing how they get occasional television content. The idea is that by withholding Hulu from those who are not paying for cable, it will discourage future cord cutters and possibly persuade previous cord cutters to return to the fold. It’s not a bad plan in the long run. Without Hulu, how else are cord cutters going to watch Community? That’s what NBC Universal, owned by Comcast, is expecting.

There are of course flaws in this scheme. The most obvious is that someone willing to tune into Hulu for content but unwilling to pay for cable will probably change his or her viewing habits. The first step in becoming a cord cutter is realizing that television isn’t that important. Putting obstacles up in front of content only reinforces that attitude. At least through Hulu there was an additional revenue stream. The article mentions that this move would potentially hurt Hulu, and I would like to chime in that it’s pretty much guaranteed.

Another flaw is the fact that cable companies provide DVRs with most of their subscription plans. What is the point of Hulu when people can just record their shows? I always turn to my DVR for time shifted viewing, not Hulu. Especially for Saturday Night Live, since all musical performances and a handful of sketches get cut out of the Hulu version. I get that Hulu is helpful for people not watching content at home, but I do not know anyone who is on-the-go enough that this matters. When the content is waiting for you at home, why settle for watching things on your laptop or your phone? It’s not like anything is really must-see TV anymore. Time shifted viewing and home media (VHS/DVDs/BDs) killed must-see TV and the idea of the water cooler conversation the next day.

Which brings me to the fact that the content usually isn’t even worth it. It’s true that I have a few favorite shows on television right now. (You’re not surprised.) But I don’t need to see them immediately. I don’t need to see them at all. But I like watching them. And I much prefer the idea of watching them at my own leisure. Complex shows like Fringe are improved by being taken out of the weekly time slot and instead watched back-to-back as quickly as possible. So the parent companies of Hulu may be doing us viewers a favor by completely removing the option of watching a show as it develops. We just get to hear second-hand how good or bad a show progresses, and then we vote with our dollars on the box set six months later.

Or rent it from Netflix. Or borrow it from a friend. Or, dare I say, acquire it through other means. And the prevalence of “other means” will definitely escalate if Hulu’s model does change. Expect an even bigger war on piracy within a year of the model change. It might be enough to just make people give up on television content in general.

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About Gospel X

I am a major mediaphile as well as a social researcher. My ultimate belief is that the media can be used to teach children prosocial behaviors and teach adults how to access paradigms. And I think that Mega Man is an amazing example of proteanism. Add me on Google : https://plus.google.com/u/0/113795848855477334599

Posted on May 2, 2012, in business, digital distribution, television and tagged , , , . Bookmark the permalink. 7 Comments.

  1. I read the article and am not sure what they’re actually proposing.

    If Hulu is providing free access, i.e. not paying Hulu, to content you paid for to another company, e.g. Comcast, I don’t see a problem with this. A great idea to build their customer base. Inflate their advertising dollars. In fact, brilliant.

    But if someone is paying Hulu to access content they already paid for — I want to meet these people because they have too much money. Another question is can Hulu even provide all the content that a cable subscriber has access to? I’m sure no one really wants to stream GolfTV, but I sure as hell would want access to MadMen or generally any content available on the channels for which I’m a subscriber. At all times. Oh, and no editing per your SNL example… (Though I mostly watch SNL for Weekend Update :).

    I’m surprised Netflix hasn’t gone the exact same route with HBO. Netflix could burden the cost of hosting, distribution, etc. It would solidify their monopoly further. I’d be willing to pay HBO’s fee if I could get their content online. But I can’t. For some asinine reason, I still must purchase cable and HBO. At this point it would seem like a win-win for both. If HBO were to partner with Hulu, I’d get a HuluPlus + HBO account. And why is ESPN or the Big10 network not thinking this way? Sports fans are notoriously loyal and now a great deal of people have picked up and moved away from the main market for their team, especially those living abroad. Overall, I think most people are perfectly happy paying for content. Some want ala carte others buffet. But its increasingly frustrating to paying a “tax” for a medium. A medium which may not suite one’s lifestyle: time-shifted, device-limited, and outside the local market for select sporting events.

    • You’re right, the proposal isn’t entirely clear. All that has been suggested is locking out people who do not have cable subscriptions, but the details are lacking. You mentioned HuluPlus, but where does HuluPlus fall in this? On top of a cable subscription, will you still need to pay for HuluPlus in order to watch some content the next day? And then there’s the question of ads, which is how Hulu currently funds itself. With a cable subscription will you get access to content and still have to wait through ads?

      As for the rest of the content on cable television, it would be great if deals could be made with Hulu and Netflix to make it available for streaming. But it won’t happen. AMC is clearly money driven, threatening budget cuts to even their most popular shows every season. While the ad revenue on Hulu would be a boon or a licensing deal with Netflix could be extremely profitable, selling TV episodes for $2-$3 per episode on Amazon and iTunes seems to be a more direct way to turn a profit for them.

      Again, this proposal needs to be fleshed out a bit. I just see it as bad business. Locking people out of Hulu will not increase cable subscriptions, but it will decrease the number of people viewing the ads on Hulu. It will probably hurt them more in the long run.

  2. It’s just stupid. These execs just don’t understand that on demand streaming is the way to go in long term. I don’t work regular hours, so to me there’s no prime time. I define my own prime time, and that is when I get home. Sure DVR may work, but I still have to remember to set it up. I definitely would not get Comcast/DirectTV just so I can watch stuffs right away, especially when ala carte is not a choice. I was willing to pay for Hulu Plus had all the shows can actually be streamed through XBOX. If they go through with this proposal, it’s adios Hulu for me.

    I for one have the patience to wait for DVD to show up on Netflix. Chuck s5 is a prime example. I did not come home early just so I could watch it ever since stupid NBC decided to take it offline. I’m waiting for DVD to show up in Netflix. They failed to make me see the commercials on live TV, and they lost my ad impressions on Hulu too.

  3. I actually have Hulu Plus for a couple of reasons:
    1.) I don’t have a DVR as it would be extra with the cable package that we have.
    2.) It does give me next day access to shows that I would watch on DVR most likely the next day or weekend.
    3.) It gives me instant access to multiple previous seasons of shows (Psych & Battlestar Gallactica come to mind.
    4.) It also allows me access to some shows and movies I would have to put a ton of effort into seeing (for example just rediscovered ‘Defenders of Earth’)
    5.) It allows my parents access to some shows they haven’t seen in decades like Kojak.

    I doubt very much this shift is going to have an effect on my Hulu Plus subscription, but what does annoy me is that the networks own websites such as ABC.com, NBC.com, Fox.com, etc. do allow you watch full episodes of their shows even without authentication now. I guess that means they will eventually force people to prove they have a subscription to view their websites which will dimish their web traffic and sales numbers.

    I completely agree that this model shift will hurt Hulu because most people enjoy seeing episodes when they want, and this site gives a bit more flexibility than traditional cable networks. I am interested to see when HBOGO.com and by extension MAXGO.com become their own entities and create rifts between those content providers and the cable companies because those sites are pretty much Hulu Plus for their respective premium channel. At this point you do need to authenticate yourself to access it through.

    • @Kaz — would you jump around to different sites? Or is it not worth your time?

      I used Hulu quite a bit a few years ago but my usage has really dropped off. One thing I loved about Hulu was its interface. It did a great job on managing shows from multiple networks. Jumping to ComedyCentral just to watch the Daily Show and Colbert Report? Bah. I’ll just stop watching.

      Of course its easy for me to say give me all my shows in one place. Clearly its technically possible but the licensing, copyright and monetization issues are in the flux and going through a number of iterations. These companies are slow movers. Most networks it seems developed their own sites in the last two years or so. When did “Lazy Sunday” announce YouTube arrived? 2005. Hulu? 2008.

      I imagine we’ll get to see technological natural selection in this space. Painful websites will die unless they have amazing shows. If the tech titans: Google, Apple, Amazon, Netflix, etc can better monetize and distribute these shows, media companies will eventually allow them to provide access. They’re capitalists, it will happen, unless they can stand on their own. But the broadcast media companies are going to fight tooth and nail to keep their current profits model intact.

  4. Thinking back to pre-Hulu there were a few sites I tried briefly like the southpark site for episodes and NBC.com, but that was only for the HEROES comics. I completely agree that the Hulu UI is very easy to grasp and navigate, so I don’t see a good reason to search out alternatives unless I can’t view what I want, in which case there are alternative methods.

  1. Pingback: Hulu's Big Mistake, or: TBIF | Stay At Home Brad

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