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The Rise and Fall of Hulu

Hulu should have been Netflix. The major networks and movie studios had ownership of the upstart video platform and provided the site with excellent content in a pleasing interface – exactly what the market seemed to be demanding. Sure it took them almost a decade to get to this first step, but it exceeded expectations with its content, technology, and success.

But as to be expected with legacy businesses, they are more interesting in protecting their legacy revenue then investing in future returns.

For the past year, Hulu has been devoting time and resources to blocking media centers, phones, and specialized web browsers, all at the behest of their media company owners. Certainly Hulu has a right to do this, but how does it make business sense to actively block people from using your product?

Now Hulu, with impressive revenue, traffic, and highly effective ads (estimated at being twice as effective as TV ads), the media company overlords don’t see Hulu as a success, but as a threat to their still highly lucrative advertising deals and licensing payments from cable companies.  Rumor has it that media companies now want to turn Hulu into more of a cable-like platform for live content and get larger upfront payments from Netflix and other streaming sites (so they can bleed Netflix dry, but that’s another blog post).

What’s really unfortunate is how blind the media companies are in regards to the potential benefits of letting Hulu drive innovation forward.  Hulu CEO Jason Kilar wrote an excellent blog post on the future of Hulu and television which really challenges the status quo. Anonymous media executives responded in the Financial Times (paid registration required) saying:

“If I were given billions of dollars worth of programming, I too could probably build a business,” the person said. “But I know that in order to build a long-term, viable business I would have to do so in a way that works for everybody.”


“These are clearly the musings of an elitist who is obviously disconnected from how the majority of America watches television.”

Except in both cases, these execs missed the point of Kilar’s article and his goal.  The first quote, believing that if you just offer the content, you can build a business, ignores that Hulu still has a tiny amount of content compared to any piracy site on the web – and there are many. Hulu and Netflix have been successful by offering an excellent user experience, making it easier and more convenient to watch content than trolling BitTorrent sites.

The second quote might even be true, that Kilar doesn’t understand the TV viewing audience, but he understands what the next generation of potential TV watchers want, and sitting through long commercial breaks is a pretty obvious trend.  It’s rather TV executives who are dreaming of the old days when viewers were beholden to set schedules. From DVR to iPads, TV viewers are demanding more control over their TV viewing habits. And if these media companies don’t catch up to the future, then someone else will leap frog them and reap all the benefits for themselves.

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