US TV Network Death Watch, Revisited
There’s been some talk about hulu delivering content via the iPhone lately, and I’ve been pretty much ignoring it, but my boss sent me a link to this piece on CNN, which is almost spectacular in its lack of accurate content. Just so you don’t need to read it, here are some key points of from the article.
- Hulu has deals with all the major networks except CBS (wrong, it doesn’t have a deal with ABC) OK my stupidity burns too. The whole starting point for the article is that Disney and hulu cut a deal, abc.com’s content will go on hulu and Disney owns a chunk of hulu. Oops, my bad.
- Hulu is hurting for traffic (wrong, it’s way ahead of ABC and CBS, for instance, on traffic; not ESPN though)
- Hulu would need Apple’s approval to distribute video on the iPhone (wrong, it doesn’t need Apple’s approval to deliver content via the web, only via an app)
This is exactly why we need the mainstream media to report the news. Obviously bloggers aren’t professionals who can research facts and chase up key details. Obviously a mere blogger can’t log on to hulu and attempt to watch an ABC show to see if it works, or visit Alexa.com to find out what Hulu’s traffic is like, or visit developer.apple.com to figure out whether it’s possible to deliver content to the iPhone without needing Apple’s approval. It takes a media insider with contacts and professional journalism skills.
Aside: hulu’s Alexa ranking is particularly impressive when you consider that it’s not a site designed for maximizing page counts. A typical user will go there, look up a show, and then watch that show for 50 minutes. That’s maybe three or four page views in an hour compared with sites that break up a two page article into four page views.
The Real Issues
There are two definite issues Hulu would face in delivering content to the iPhone and two probable.
First, Hulu suffers from a really embarrassing technical problem: often, when you watch one of its shows, it gets to the place where an ad would go, and — miracle of miracles — it actually has an ad to show you, but, for some utterly unbelievable reason, it doesn’t show you the ad, but instead shows you 15s or 30s of black. This is “dead air” and is a fiasco. Getting this stuff right should not only be a top priority, it should be easy to do. Speaking as someone who put together a video advertising system for Valueclick Media in about three months with the help of two other people, it isn’t rocket science, and this is where they make their money. It’s like trying to create McDonalds and forgetting to make sure the cash registers work.
Second, Hulu doesn’t have any advertisers. (Well, it has so few it’s embarrassing.) If you watch hulu much at all, you’ve probably seen a ridiculous number of PSAs (public service announcements). These are ads produced by the Ad Council to be used as filler when no paying ad is available or to fulfill a public service requirement (e.g. TV stations are required to show a certain amount of stuff for the public good, which is how you occasionally see an ad against teen drunk driving in prime time). In short, Hulu’s problem isn’t traffic (page hits) but fill (ads to put in page hits). If Hulu were a magazine it would be thin and have very few ads in it, and there would be subscription cards offering lifetime subscriptions for only the cost of three issues at the news stand.
This leads to the first probable problem. Clearly, hulu has terrible cash flow (i.e. it’s bleeding money), and spending its cash reserves to get more traffic when it actually needs more fill only makes sense if its investors take a long view. Maybe they do, maybe they don’t, maybe they’re on the fence. But convincing them is going to be an issue. (It’s possible that hulu’s investors are simply insane, since they don’t seem to be too incensed about the first issue mentioned.)
And the final probable problem is that hulu almost certainly has a contractual restriction against serving video content to a range of IP addresses which the IP owners (NBC and Fox) can change at whim. It’s quite possible that serving video to cell phones (Apple’s or anyone else’s) might require renegotiating their licensing deals. And we all know how reasonable and sane the networks are.
Note that the only technical issue here is (I would hope) pretty simple and actually applies to hulu’s existing business — delivering ads (when there are ads to deliver) should be the absolute top technical priority for a company whose bottom line is entirely dependent on doing so. Hulu needs to fix that whether or not it targets cell phones. Note that the second problem (convincing investors it’s worth doing) isn’t a consequence of it being hard to do — it’s perfectly possible to be sitting in a high tech company with money sitting in a giant pile “on the table” and have a perfectly good, inexpensive or free no-risk plan to get that pile of cash, and be unable to convince anyone that the company should do it. Believe me, I’ve been there. (“We wouldn’t want to cannibalize our other [non-existent] revenue streams.”)
So will hulu do it? No clue. But there’s no technical issue, and the only third-party dependency are hulu’s network partners. But we all know how reasonable and sane they are.
Technical Aside: isn’t Hulu flash-based?
To deliver video on iPhone without requiring Apple’s approval requires using a codec supported by the iPhone. Luckily, the iPhone supports the best video codec available (H264) and so does Flash. Now, I don’t know how Hulu’s video is currently encoded, so they might well have to re-encode everything for the iPhone (et al), but doing so is technically trivial and — really — you want lower video bandwitch (and resolution) for small devices anyway. It wouldn’t hurt hulu to be able to deliver a lower-bandwidth version of its content to non-mobile devices and laptops anyway, since a lot of folks (like me) are bandwidth constrained by wireless rather than their internet connection, and mobile users always are.
Post Script: Disney Deal
While hulu’s inability to place ads where they go is pitiful, abc.com’s was worse. Not only does — or should I say did? — abc.com require you to download a special “player” to watch their content (presumably Adobe AIR, which is to say Flash in a web page pretending to be an application), but the player would drop out of full-screen mode to play ads, occasionally hang on ads, and — like hulu — often show dead air instead of ads which, combined with hanging and disabling the UI during ads, was truly annoying. So if anyone had a good reason to go the hulu route it was Disney.
Now, given Jobs is Disney’s single largest shareholder, and Disney now owns a chunk of hulu, maybe hulu will get fixed.