Hulu Plus
Yesterday, Hulu announced Hulu Plus, a service that users can take advantage of to watch Hulu content on mobile devices (such as iOS devices) and consoles (such as the PS3 and Xbox 360). The service costs $9.99/month, and retains all advertisements currently embedded into the free web service (their release calls it an “ad-supported subscription product”, which seems rather oxymoronic if you ask me). It’s not entirely without additional benefit though, as many more back episodes of many shows (such as X-Files and American Dad) will be available to subscribers, and they can be watched at 720p (the website only offers video in 480p).
As interesting as it is to see Hulu come to the iOS platform, I feel like someone in the executive offices still doesn’t really understand the way the internet works, or how converged our devices are becoming, and is trying to artificially segment the availability of their content to score additional revenue according to outdated concepts of viewership. Ultimately I guess it’s not that surprising of a move, since “Big Content” (ugh, now I feel like a conspiracy theorist/dirty fucking hippie) has historically proven itself to be completely opposed to changing its business model in the face of new technological challenges, but it is still disappointing nonetheless.
The biggest problem, as I see it, is that the content providers are still trying to distinguish between television screens and, well, everything else. They’ve even taken it one step further now and turned mobile usage into a premium-only experience that goes completely counter to the trend in video consumption over the past few years. This all started, of course, with Hulu’s media overloads expressing displeasure with the fact that Boxee was allowing users to legally consume content from Hulu’s own openly-accessible feeds, ads and all, without using Hulu’s website to do so. Worse, you could do it on your television! The horror! So, Boxee got banned from accessing Hulu, and they’ve been in something of an arms race ever since to get around the arcane distinction that Hulu has created between watching their content on a computer connected to a monitor, and watching that same content on a computer connected to a television screen. The EULA for Hulu’s own Hulu Desktop application actually expressly forbids you from installing it on a computer connected to your TV. Like that’s even remotely enforceable.
It’s like Hulu understands that the internet is an important platform, and even goes so far as to make their service trendy and modern with things like show queues and RSS feeds for available content, but totally misses the point of the internet as a ubiquitous-access platform, and is instead trying to protect their existing distribution methods while making token concessions to the internet-savvy crowd.
I think advertisers are also behind the curve on this one, which isn’t helping the adoption of internet-based services by content providers. Online ads are notoriously less profitable by a wide margin, compared to television ads. I understand why this is true for traditional web advertising, where banners and buttons are incidental content that can be easily ignored (or even blocked) by users. But when it comes to advertising on services like Hulu, where ads can be highly targeted, and are shown in a way that creates a captive audience, I would think that despite the smaller number of eyeballs, such ads would be more valuable to advertisers because viewers are more likely to actually pay attention to them.
Hulu really could make a strong case for charging premium prices for online advertising. The ads themselves already exist in most cases, since they’re just running existing TV ads, so there’s no additional overhead for creating them. They can be targeted to users based on their preferences, so they’re immediately more relevant to the end consumer than TV ads. There are a limited number of ads that run in a Hulu-broadcast episode or movie, which should again increase their value, not decrease it. Finally, because of this limitation on the number of ads being run, users are more likely to actually watch them than they are TV ads, which run for upwards of 5 minutes per break, giving users ample time to leave the room and perform quick tasks, and thus decreasing the viewership of your ad. With Hulu’s 30-second to 2-minute ad breaks, it’s much harder to go to the bathroom without missing something (assuming it’s more convenient to stay seated than to have to scrub back to the start of the segment, which for me it generally is).
When it comes to the whole Hulu Plus thing, I again think someone in the board room has misunderstood what I think could be called a generally-accepted social contract for advertising online. Namely, free content is very probably going to have ads. That’s understandable – and even acceptable –though depending on how the service provider chooses to implement them, folks may get grumpy about it. Paid content, however, is usually paid for so you can skip or avoid the ads. Hulu Plus doesn’t do this, instead opting to double-dip with both subscription and ad revenue. I think this is the source of much of the angst being expressed online about paying for content with ads, even though we already do so in so many other venues (cable TV is the oft-cited example, but it also applies to newspapers, magazines, DVDs, and even movies at the theater). People are used to buying into a web service to remove ads, and Hulu Plus doesn’t provide this convenience. That, combined with the $10 price, leaves a lot of people (myself included) feeling a bit put off.
As I mentioned earlier, this is further compounded by the fact that Hulu is only available on mobile devices with a Plus subscription. There’s no access to the existing free service through the Hulu app in the App Store, you have to pay for Hulu Plus in order to be able to use it. Again this strikes me as a move destined to leave money on the table. There are hundreds of millions of video-capable mobile devices that Hulu could put itself on to increase its viewership pool and thus improve its leverage against advertisers for more expensive ad rates simply by offering a free Hulu app. Instead, they’ve made a move that looks greedy (even if it actually isn’t) by instituting a pay wall on mobile devices.
Ultimately, for a company whose stated goal is to offer TV anywhere, they’re going pretty far out of their way to put up a ton of road blocks to that goal. Whether this is because of an internal lack of understanding of the internet (which I doubt… the Hulu guys themselves seem pretty savvy), a panicked move to try and improve their revenue stream (which is possible considering how many PSA ads get run these days), the result of external meddling by their largely technology-inept content overlords, or a combination of the three, it’s just frustrating to see such a promising service continue to shoot itself in the foot when trying to connect with its most fervent supporters.
I’ve actually come pretty much full circle on Hulu since it launched… at first I was initially skeptical of the obvious stick-it-to-Apple nature of the service’s unveiling just after NBC ditched the iTunes Store a few years ago, and was not even remotely interested in it. It eventually won me over because of the breadth of its offerings and the convenience of being able to watch shows whenever I wanted without tediously long ad breaks. Then they started doing week-long delays of new episodes (again, a concession to a media empire that just doesn’t “get it”) and losing providers, which decreased its value. The final straw for me was when they banned Boxee for entirely pointless and completely stupid reasons at the demand of their primary stakeholders, who happen to be NBC and Fox. Since then, the service seems like it’s been on a downhill slope in terms of mindshare and usage share, and Hulu Plus is a rather desperate bid to try and regain lost revenue without actually bothering to understand the reasons for their declining popularity in the first place.
Needless to say, I won’t be subscribing to Hulu Plus. I would almost certainly have put the app to decent use on my iPad if it offered the same level of service for free as their website, but I don’t need it nearly often enough to justify spending $9.99 for the convenience of being able to watch on the go a show or two a month that I might have missed, or want to revisit. I just don’t watch that much TV in the first place. I also tend to prefer buying the few shows I do watch on iTunes, since it’s generally cheaper and faster than waiting for the DVDs (even in HD), and the episodes are almost always available the following day if I miss one.

