Hulu And The Value Of Content

The blogotwitisfacebooksphere has been all abuzz with the very idea that Hulu might be charging for content at some point in the near future. This piece at NewTeeVee does a good point of catching you up with the story so far.

I brought the idea up on Twitter and got back a few responses. This one was my favorite:

@colligan – You think HULU makes it with this model? They are getting greedy too quickly IMO.

Is it really greedy to make money from content that you own?

Is the problem greed – or just a bad business plan?

Of course, we could ask this question about Wall Street and Detroit – but that’s another post all together.

Hulu reminds me of some of the first dotcom bubble companies – they’re all about enjoying the ride but being honest enough to know that the ride ain’t gonna be around for long.

There was a company in Portland that would actually deliver to my office a pint of Ben and Jerry’s at cost. They would even pick up my dry cleaning at my house (and deliver it back) for less than I was paying at the time to take it to the dry cleaners (and, of course, they did so in these massive trucks “wrapped” with their branding). You bet I used the company and you bet I enjoyed the ride but, … let’s be honest, … I always knew it wouldn’t last.

Time to face some simple facts with Hulu:

1 – Yes, a single (30 second) commercial per break is wonderful but admit it, 75% of them are PSAs. If you can’t sell a single ad per slot – you can’t sell multiple ads per slot – even if people would “put up” with watching them. The ad model isn’t working for Hulu – and anybody who cares about the future of Hulu needs to ask if it ever will.

2 – The fact that Hulu starts each show with a reminder to watch it live with the full commercial experience reeks of a company who has sold some content owners a fascinating bill of goods. The reality that the EULA for their desktop player prevents you from hooking it up to a television set says more about what they think of their audience than this blog ever could. Hulu doesn’t like you skipping the traditional “channels” to consume content on your terms.

3 – The silly fight with Boxee – ’nuff said.

4 – The “experience” is wonderful and the programming is impressive but, admit it, they’re losing money on each and every stream. I’ll direct you back to my “You Can’t Handle The Truth” posting of over a year ago for more on that one.

I’ve said it multiple times – Hulu can’t scale and the coming Hulu is nothing like the one we have today. Personally, I’d prefer the paid model because my time is worth more than these silly commercials take.

And I honestly believe yours is as well.

Here’s the deal: Good content has value.

If we took half the energy spent on trying to figure out how to deliver it for free and put it towards coming up with a payment and delivery model that actually made sense, we’d all be better off for it.

How anyone can spend the money they do on connectivity but feel that the media said connectivity brings should be free is akin to thinking cds should be free because your paying for electricity – or that food should be free because you bought a fridge to hold it in.

When the futurists stop complaining about what the future is obviously bringing, we might get to enjoy the future a bit sooner.

‘just sayin …

Please note: I reserve the right to delete comments that are offensive or off-topic.

  • Doug S

    I agree I would rather pay for great shows but make paying as easy as possible. No fuss. With options for both episodic and recurring payments.

  • paulcolligan

    yup. i think a monthly fee for all you can eat streaming would be really clean.

  • Doug S

    One price kind of line netflix. $20/month it would probably scale at done point. No ads either.

  • Wesley

    I have no problem paying for Hulu. I didn't switch to Hulu because it was free, but because regular cable was too expensive. $50/month for a basic package that I watch maybe 5-7 hours a week was idiotic.

    If they charge $2.99/episode or something stupid (I'm looking at YOU, iTunes) like that, I'll either go back to cable or just do without. If they charge $1/episode ($0.50 for 30 minute shows) then I'd happily pay for some shows, and happily drop some others from my viewing, and consider myself lucky.

    I've wanted A La Carte viewing for years. The cable companies won't do that with channels. If I could get it with *SHOWS* I'd be even happier.

  • BetterBizIdeas

    Paul, I guess my quick witted Tweet was taken just a bit out of context. 140 characters really hurts the ability to convey total thoughts surrounding a topic :) A blogpost or a comment to a blogpost on the other hand….

    The short-version of this is that NBC knows they are getting attacked by cable (20 years ago introducing 50-60 channels to compete with), DirecTV/Digital cable (last 10 years with hundreds of channels to compete with) and now the Internet (YouTube with thousands of potential channels to compete with).

    They are being WAAAAY too short-sighted by trying to get people to pay for this so quickly. What they are trying to do is get people to CHANGE or adopt to a new channel/distribution method. They don't seem to understand that, on the Internet, they are only one channel of TONS vying for my attention. They'll never compete with YouTube because YouTube enables people to upload/create the content :) YouTube sucks people into finding the “next cool thing” to share with their friends and then the minutes disappear from their lives. Oh, and I don't have to pay for that content except with intrusive ads. We'll have to see how that advertising method evolves over time because I have never INENTIONALLY clicked on a flash embedded advertisement within a YouTube channel.

    Monetization of content is a tricky, tricky game. It ain't easy. And before we try to say YouTube is the genius medium, I'd love to see their income statement with a fully-loaded costing methodology vs. “views”, “minutes”, etc.

    Nothing in life is free. Good content SHOULD NOT be free either but there is no “hook” that will cause me to pay for HULU content. HULU, in my opinion, will be able to charge when they get people used to watching shows or some exclusive content. They can then let people have access to that content 24/7/365 content on any device. Then, and only then, will they be able to get people to pay for it. They have to get people USED to watching their content differently. Charging for their content might work for some, as some people feel $50 for content is too expensive and they watch maybe 1/100th of the content they are paying for so, by paying for a few channels, it works for them but I don't think it works for FAMILIES with widely varying content needs (Nickelodeon, MTV, HBO, NFL Sunday Ticket, Oprah, BrideTV, HGTV, etc)

    HULU needs to get people used to watching their content via the net or via connected devices 24/7/365 and “subscribing” to their Internet channel before it becomes viable for most people. Otherwise, I think they'll find they won't generate enough revenue to pay for the costs of the network. They need to PENETRATE the Internet audience first.

    I just don't see people willing to pay for it because they already HAVE IT, just via a distribution channel. These guys are trying to get me to pay for something I can already get via cable, my DVR (recorded) or by purchasing the DVDs (and subsequently owning a hard copy or digital copy of them).

    Let me go one step further. The experience isn't as good! Watching it on a computer screen isn't as pleasurable, for me, vs. my big screen and plush couch with surround sound. Remember, we are talking about NON-EXCLUSIVE CONTENT I can already get via existing distribution channels.

    Oh, and I have no problem paying for content. I've got magazines, books, book summaries, CDs, Books on CD, DirectTV with NFL Sunday Ticket <–talk about paying for EXCLUSIVE content, there is your example.

    I think millions….no, hundreds of millions of people, would agree. We still pay to see the movies in the theatre, right? $32 was the last cost for me and my fiancee to attend the movies. 2 tickets, 2 drinks and a bucket of popcorn for 1.5 to 2 hours but the experience was even better than being at home. That monstrous sized screen, surround speakers, etc.

    Anyway, I could rant for hours. I love your stuff Paul. Keep it coming! You and Mike are so far ahead of people via content distribution it isn't even funny…

    Dan Ross

  • Austin Beeman

    The problem here is the networks. We'd love to pay the content producers of the shows we love directly for their shows. I'd even pay in advance for shows with really cool ideas or JOSS WHEDON. Even Itunes model works for me because I pay far less and prefer watching on my terms.

  • Austin Beeman

    The problem here is the networks. We'd love to pay the content producers of the shows we love directly for their shows. I'd even pay in advance for shows with really cool ideas or JOSS WHEDON. Even Itunes model works for me because I pay far less and prefer watching on my terms.

  • Marshall Wayne

    I really enjoy how Hulu is currently. I also pay for many shows on iTunes on my Apple TV since it's WAY nicer to watch on my HDTV than it is on my laptop or desktop.

    I'm interested to see how this turns out. NBC is really scrambling to figure things out now with this whole Leno/Conan situation. The networks have have to be really worried about their future.