Note to Hulu: please stop worrying about Boxee and just let Boxee do whatever it wants.  Not to make Boxee happy, but because today,  Boxee is so trivially insignificant that it doesn’t even really merit Hulu commenting on it in a blog post, let alone worrying about blocking it.  Plus, all that the back and forth does is give FREE PR to Boxee.  Why give them free PR?  Why willingly make more people aware of technology that  scares your owners and content partners?  But there is a way to quell their fears.

Don’t focus on complaints from geeks, focus on solving problems

There are a lot of geeks on the Internet.  LOTS of geeks.  The people running this website are geeks, perhaps even to an extreme.  Yes, I am freakish enough to actually have hooked my computer up to the Television with Boxee!   But I’m completely aware of what a statistical outlier I am.  In the future it might be different, but today it makes me a complete freak,  just like anyone else who has done this (excluding Fred Wilson, who is perhaps not a freak, even if he is a geek, but his venture firm is invested in Boxee, so he doesn’t count!).

Tell News Corp, NBC and your other investors and partners you’re going to solve those sorts of problems in a different way.  See, the problem your parents have isn’t unreasonable.  They think “Hey, we make much more money for a pair of eyeballs on TV than we do on the Internet! Since relatively speaking, most people aren’t watching on the Internet, for now, we can live with that.  Until someone has some service that hooks up to an actual TV!  Like freaking Boxee! There, we have to draw the line.”

But there lies the problem with the fundamental business model of Hulu.  Sure, television content *is* among the most popular and revenue generating video content on the Internet, but if I have one model where I have 16 minutes of national advertising in an hour (television) and another model where I have two or two and half minutes, unless I can sell the advertising at an enormous premium, the television model is going to be far more profitable.

The business models for TV content whether online or on TV need parity

Profits need to be equalized for online video to succeed and if that equalization comes at the expense of lower rates on television, that is BAD for everyone, especially the people who like watching video content! While there is no question that you can sell the online ads at a little bit of a premium, there’s not nearly enough of a premium to offset the difference in revenue from television versus Hulu.

There is only one way to equalize that. More advertisements!  For viewers online, that kind of sucks, but it sucks MUCH less than not having the convenience of on-demand online access!

Sure, I know it’s anathema to the vocal core of the Internet, but so what?  If your core constituency is a bunch of self-important whiners who think they are entitled to free content, on demand, whenever they want, without the content providers getting paid, let them whine!

Torrent, schmorrent

Sure, some people will say that they will just download the torrents. And some of them will, but not in a big enough way to concern yourself with.   That’s not reality.   Let’s face it, most people are lazy.  Most torrent downloading of shows from the USA comes from outside of the USA from people who do not want to wait until the shows air locally where they are.  Hulu has bigger fish to fry than that issue, which is not in Hulu’s control.

Of course some people in the US will download torrents too, but if you add 10 minutes of commercials to shows that are an hour on television, I don’t see the majority thinking, “Damn, that 10 minutes of extra ads pisses me off so much! So instead of watching them, I will spend 30 minutes of waiting between finding and downloading a commercial free torrent instead of having the convenience of going to Hulu RIGHT NOW and watching with 10 minutes more advertising!”

Yes, some people will spend 30 minutes to avoid 10 extra minutes of advertising,  but very few of them.  Some people will also download the torrents simply because they want the content on their hard drives. But that has nothing to do with Hulu. .  It’s not most people though, or anywhere near most people.  You don’t need a lot of research to figure that out either.

The only solution right now for Hulu and other online video properties showing television content online is more commercials, and more commercials to the point where they’re on equal revenue footing with television.  That solves all problems, including freaking Boxee.  Will Fred Wilson complain that his free TV now has ten minutes of extra commercials?  Probably, but he’ll at least be happy he can watch it via the Boxee interface, Hulu will be happy that it’s making its content partners happy and, most importantly, its content partners will be happy!

There are definitely bigger fish to fry than Boxee

Hulu will have to figure out how to satisfy the advertisers with good demographic information and ultimately probably have to suck it up and do a deal with Nielsen.  Clearly good demographic information for its advertisers is another problem for Hulu that is far more important than Boxee.  Anything to sell ads though!  As they say, this is the business you have chosen.

And now Hulu is looking to go international.  Good.  Great even!  But, even here, Hulu will need to sell more ads to get to the parity with television described above.  Many people lament that Hulu geographically blocks many areas from viewing the content.  People incorrectly blame this geographic blocking (often referred to as Geo-tarded) on Hulu and other video providers when the truth is it boils down to how the digital rights are sold.  Example: NBC sells the rights to Heroes to the UK.  Typically, the UK company buying the television rights also buys the digital rights.  At that point, nobody besides that company in the UK that bought the rights has a right to serve the show digitally to people in the UK.

And the company in the UK with those rights seemingly usually doesn’t even want to make the show available online  because they are worried about making enough money online.  They don’t usually want to do anything to encourage people to watch online where they will make less money.

It is inevitable, so why wait?

Hulu is growing nicely and now is definitely the time to build in the extra advertising that will make Hulu a truly viable business and one that its content partners LOVE.  Hulu will have to do this sooner or later. Doing it later will be harder.

Posted by:TV By The Numbers

blog comments powered by Disqus