Hulu’s Growing Pains & A Live “TV” Solution?

Dave Zatz —  January 27, 2011

The Wall Street Journal has a fascinating (and lengthy) take on Hulu’s story arc.

The free online television service has become one of the most-watched online video properties in the U.S. and a top earner of web-video ad dollars since its 2008 launch. But its owners—industry powerhouses NBC Universal, News Corp. and Walt Disney Co.—are increasingly at odds over Hulu’s business model.

And that’s the crux of the matter. We’re clearly in the midst of a dramatic industry transformation, in how (and where) we consume video entertainment. Yet there’s no universally agreed upon or clear path forward. Hulu’s internal and external struggles, partially illustrated by an unpredictable catalog of content and two unclear tiers of service, are surely representative.

Given the licensing challenges and competitive landscape, Hulu’s considering switching gears to become a “virtual cable operator.” As such, Hulufinity would provide live “television” across the web. However, if they thought licensing back catalog content was difficult, they ain’t seen nothing yet. The networks will continue to protect their local affiliates and know where their bread is buttered… and, despite the winds of change, it’s currently via the cable and satellite providers. Not to mention, I’m sure those very same cable providers have been researching similar offerings of their own. And they’re certainly better positioned to capitalize.

13 responses to Hulu’s Growing Pains & A Live “TV” Solution?

  1. And there still ain’t the infrastructure to do “live” via IP delivery, even if the other insurmountable obstacles went away.

    Hulu is the new Yahoo.

  2. Yeah, was going to tweet something like ‘Hulu could have been a contender’.

    Regarding IP infrastructure, I bet AT&T and Verizon are better positioned than all others. It’s going to get interesting.

  3. Well, since multicast doesn’t work over the general internet but DOES work if enabled by an MSO over their own network, and only their own network, an MSO could easily offer a live TV over IP solution while you are in your home that would scale very well, without having to put in a lot of back end servers and so forth. No transport costs or CDN costs either. Would make a lot of people scream ‘net neutrality’ maybe if they could understand the technology, but its just the way the tech has worked out.

    It would be no more work for Hulu to stream live TV to PCs and some quality though than the same number of streams of on demand content. Its the same thing really. Might even be a little easier for the servers since they wouldn’t even really have to store anything, just keep a few seconds in RAM (at lots of different bit rates) to support the ABR streaming.

    Like others this makes no sense to me at all though. It certainly might go down this way if ABC or Fox or whoever pulls their content. Hulu won’t have much say if they do. Likely NBC won’t be the first given the Comcast deal, but it wouldn’t take long to gut Hulu’s library. Good thing they didn’t go public I guess. They had good reasons not to.

    Like Dave, I can’t imagine they can negotiate access rights. And the cable channels are used to getting paid for access, so they’ve got no shot at most of those. Sounds ominous for Hulu.

    I guess in trying to combat piracy these guys created a monster that was worse than piracy huh?

  4. well there is one big thing that si being overlooked and that is the tremndous amount of bandwidth required by subscribers to stream live tv all the time …for example Time Warener ,Frontier for example have data caps and tha tproblem is abig one to overcome:)

  5. Broadband caps and net neutrality are familiar topics here on ZNF. And we agree that there certain are challenges in relation to QOS and bandwidth. Yet I do stream 1080p content from the web in near real time and live “television” is coming. Perhaps not all HD, perhaps not hundreds of channels, perhaps it won’t be ideal or usable on certain providers (with low caps or DSL). However, when building a business (or changing course, as Hulu may), you don’t just plan for 2011… hopefully you’re looking ahead. What might our network infrastructure look like in 2020 or beyond?

  6. “Well, since multicast doesn’t work over the general internet but DOES work if enabled by an MSO over their own network, and only their own network, an MSO could easily offer a live TV over IP solution while you are in your home”

    That’s a lot easier said than done. Not to mention that every MSO has different kinds of infrastructure that will need to be upgraded in a balkanized fashion.

    Not to mention that it’s a solution in search of a problem.

    Will we see live IP Hi-Def TV delivery in 10 or 20 years? I wouldn’t be surprised if the answer is yes, but I also wouldn’t be surprised if the answer is no.

    It’s a lot of resources to re-solve a problem that is already solved…

    —–

    “However, when building a business (or changing course, as Hulu may), you don’t just plan for 2011… hopefully you’re looking ahead.”

    I’ve always been bearish on Hulu, primarily because I disagree with the CW on Hulu’s purpose.

    I don’t think Hulu was established to be a viable long-term business.

    I think Hulu was established by the content companies to prevent an iTunes-type solution from picking off the content companies one by one as happened with music.

    In other words, from where I sit, the purpose of Hulu was just to stifle any real solutions from emerging until it could be done on the content companies’ time schedule.

  7. “It’s a lot of resources to re-solve a problem that is already solved…”

    Agreed.

    Interesting theory on Hulu’s existence. Not sure I buy it… I feel it was supposed to be the studio’s solution. But now they want to kill it and roll their own, under their own ever fluctuating terms. (Since they no longer exert full control and can’t seem to agree on what they want.)

  8. Worth noting that I’d happily pay $300 per year for a version of NBA League Pass that gave me all live games in HD, which the current version does not, due (I’m assuming) to QAM broadcast bandwidth limitations. (Even with FIOS, NBA League Pass is one channel in HD, and nine channels in SD.)

    Now, perhaps that gets solved via increasing bandwidth limits via the sensible broadcast model, rather than via some newfangled IP multicast solution…

  9. “Interesting theory on Hulu’s existence. Not sure I buy it”

    If you sample the theory for an hour, and run back each of Hulu’s individual decisions using that theory as your guide, each decision makes perfect sense. I don’t think any other Hulu theory theory will function that way. Even citing sheer chaotic management incompetence doesn’t fit the decisions as well…

    “Since they no longer exert full control and can’t seem to agree on what they want.”

    Unless what ownership wants is just to occupy the space enough to prevent an iTunes-style middleman from successfully emerging, of course. If Hulu is indeed just a FUD maneuver, then the new course will do just fine for a while.

    —–

    That WSJ article really is pretty tasty, BTW. I’m glad you made me read it. (And why is it that no one ever really talks about the Rupert / “Dead Steve Jobs who owns Disney” alliance that’s been going on for a bit? It seems like a very important factor in media/tech warfare story to me.)

  10. “Hulu’s owners are now considering management’s proposal to create a “virtual cable operator”

    Anyone have any idea what that actually means?

    (Of course, I assume the question is moot in this particular case, considering ownership won’t be happy with “virtual cable operators” due merely to the fact that the nation’s largest MSO just bought the Hulu owner with the biggest stake…)

  11. chucky you’d be better off just getting directv and paying $169.00 for nba league pass ,they have EVERY HOME and AWAY GAME IN HD!!!

  12. @Chucky,

    1) Yes I should have been more careful with the term “easily”. All I meant was they could, in theory, use multicast in their network.

    2) “Dead Steve Jobs”. Seriously? The worst possible bad taste. We all hope he gets better, and lives a long and fruitful life…

  13. “Dead Steve Jobs”. Seriously? The worst possible bad taste.”

    You have a rather limited imagination if you think that the “worst possible” bad taste. Watch some John Waters movies.

    Also, if you bother to note context, you’ll see the line comes from a reading of the media wars that posits a future with a living Steve-o. (Is referring to them as “wars” kosher in your book, or do too many people die in literal wars to make that tasteful?)

    But, de gustibus non disputandum est. I thought Jackass 3D should’ve gotten a Best Picture nomination.

    “Yes I should have been more careful with the term “easily”. All I meant was they could, in theory, use multicast in their network.”

    It’s certainly feasible from a technical POV. It’s just hard to see it being feasible from a business POV any time soon. And since money funds tech, well, you get the point.