Where’s TV headed? Ask Hulu CEO Jason Kilar. His company has insight from “daily interactions with users, advertisers, and content owners,” as he mentions in a recent company blog post.
What Do We Want?
In a nutshell, consumers want fewer ads, the convenience of on-demand programming available from any device, and we’ve demonstrated the ability to save or sink a show faster than ever before thanks to social media.
Advertisers want to be able to target ads more efficiently. And content owners want to paid for the work they create. Both advertisers and content owners want money, basically, which shouldn’t be too much of a shock to anyone.
Hulu’s stance is that since consumers want fewer ads and convenient on-demand programming, the industry should “exploit these new trends and leverage them to build great businesses.”
When Do We Want It?
The challenge for an online video service such as Hulu doesn’t have as much to do with consumers as it does in trying to convince advertisers and content owners to spend more money and put more content online—especially in the face of the standard revenue models afforded by traditional television.
“History has shown that incumbents tend to fight trends that challenge established ways and, in the process, lose focus on what matters most: customers,” says Kilar. “Hulu is not burdened by that legacy,” he adds.
Except that it is.
Hulu is jointly owned by NBC, ABC and Fox—all content owners deeply entrenched in legacies of their own. We find out later on in the blog post that Kilar’s actually referring to the TV distribution business as the part of the equation that’s due for the most upheaval. These are the cable and satellite companies, though we’ll have to overlook that NBC and Comcast are now in cahoots; one’s a content provider, one’s a distributor and the newly-merged company owns a big chunk of Hulu.
Whatever the case, Kilar’s basic premise is that the near-term future of TV will feature greater access to programming available directly from the source and better advertising returns thanks to online video services.
How Will We Get It?
Revenue for online video ads is increasing, according to Kilar.
Hulu’s ad revenue per half-hour stream has tripled since 2008 and is now higher than ad revenue for broadcast DVR, cable and cable DVR advertising—it’s still shy of conventional broadcast revenue but if it keeps growing like it has been, it’ll soon overtake TV ad revenue altogether.
So since advertisers and content providers both want money, and Hulu’s above graphs show that the money’s moving online, TV will continue to move more and more online. Everybody wins except the content distributors like Comcast, but they can just sell more expensive, faster internet access to make up for all the TV that’s moving online, right?
What About Consumers?
We want fewer ads, which Hulu’s actually capable of doing thanks to its “patentable technology” that delivers more efficient and targeted advertising. That’s a good thing. We don’t have to watch as many ads in an online video stream as we’d have to watch during a conventional TV program, and those online ads make more money anyway.
Keep in mind, however, that there’s nothing stopping Hulu from stuffing more ads into a stream except Kilar’s contention that if Hulu tries to serve too many ads, we’ll all go back to watching DVR’d programs so we can skip the ads.
Here’s Kilar’s most important point about consumers, though:
“Consumers also want the freedom to be able to watch TV on whatever screen is most convenient for them, be it a smartphone, a tablet, a PC, or, yes, a TV.”
And it’s a dream that’s repeatedly and systematically killed by the content providers—ABC, NBC, Fox and others–not the content distributors.
Can we watch Hulu on a smartphone? Yes, but only if it’s made by Apple. A tablet? Yes, but only if it’s made by Apple. A PC? Yes. A TV? Yes, but only if Samsung, Sony, Roku or Vizio are involved somehow.
A PC hooked up to a TV? Yes. A PC hooked up to a TV but this PC is called Google TV or Boxee? No. Hulu arbitrarily blocks its website (as do many of the large content providers) from the web browsers of certain TV-specific computers like Google TV and Boxee.
And keep in mind that you have to subscribe to Hulu Plus for $8 per month in order to watch Hulu content on anything other than a PC, and that $8 fee doesn’t remove ads from any of the programs.
It’s part of Hulu’s very cable-like “dual revenue subscription service; one revenue stream from the subscription fee, the other from a modest amount of advertising,” according to Kilar’s post.
An Alternate Future?
Don’t get me wrong; the idea of paying $8 per month for access to a ton of TV shows is much more appealing than the $100+ per month I shell out to Comcast for the five channels I actually watch.
I’m also truly pulling for Hulu’s vision of what the future of TV will be like to become a reality because I believe Hulu’s probably one of the only services that can actually pull it off. And why shouldn’t it be able to? It’s owned by three big content providers, so it has access to lots of quality content.
But the post’s notion that “the future of TV is going to be very good to users, advertisers and content owners/creators” doesn’t seem to jive given the current state of affairs. Advertisers? Yes. Content owners? Yes.
Consumers? Maybe a little bit in the form of fewer ads and potentially lower subscription prices. But the methods in which we’re “allowed” to ingest content as dictated by the types of content owners who a) jointly own Hulu and b) are blocking their own websites from Google TV and Boxee while dragging their feet on non-Apple apps still have a long, long way to go.
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