Why Hulu is clashing with potential partners

February 23, 2009

Two news items from last week are worth commenting on in the same post:

  1. Hulu insisted that Boxee pull its Hulu player from Boxee. For the un-nerdy, Boxee is the open-source media player software that I put on my Apple TV a few weeks back. Until last week, it allowed you to access Hulu online videos direct to the TV without the help of a PC. 

    The Boxee/Hulu experience is tremendously satisfying. Plus, it preserves all the advertising that Hulu needs to sustain itself. However, by making it super easy (some might say, convenient) to get online TV shows to the TV, Boxee is a threat to Hulu’s content partners, many of whom are still petrified about cannibalizing linear TV shows. So while those partners may be willing to support PC-based viewing, the moment Hulu is easily accessed on the TV, they get creeped out. Never mind that 5 million PCs in the US are currently connected to TVs for exactly this kind of experience — far more than AppleTV or Roku will ever have.
     

  2. Hulu pulled its content from syndication partner TV.com. TV.com is a CBS-owned TV fan site that previously focused on chat rooms and clips, but as of a month ago announced an online TV player strategy designed to monetize its 5 million viewers more effectively. The secret sauce was access to Hulu content (Fox + NBC) as well as CBS content, delivered through a player experience that was remarkably Huluesque.

    Design infringement aside, it’s hard not to see this one as an effort by Hulu to persuade CBS to allow CBS content to join the Hulu experience. If it’s not such an effort, it should be. Hulu is eager to allow syndication partners like Fancast and IMDB to succeed, but it doesn’t really want to enable CBS to have all the benefits of Hulu content without having signed up to be an official part of the system. Seems fair. Honestly, the only reason CBS wouldn’t want to do this is it would mean acknowledging that its costly and time-consuming solo syndication efforts were not enough. 

What’s going on here: Hulu is getting more and more powerful every day. And not just because it managed to get Alec Baldwin to promote it during the Super Bowl. It’s because Hulu gives people the thing they want most: easy access to top TV shows. But with great power comes great responsibility, at least in the mind of TV execs who suspect that Hulu will eventually erode their TV business (which has been steadily eroding anyway, not on an overall basis, but on a per-show basis).

With ad dollars tightening in a recession — across the board, mind you, not just in online video — TV execs who never liked the idea of online video in the first place are going to claw their way back into prominence inside their companies and start arguing for more restraint. We’ll see more removals of TV shows like The Mentalist, more announcements like that from SciFi about postponing Hulu streaming of  Battlestar Galactica until 8 days after broadcast.

All of this is part of something I call the coming online video backlash. It’s going to take this whole year, and it’s going to inspire a lot of hasty moves on the part of TV executives to pull previously available content. And consumers are going to hate it.

I don’t envy Hulu’s position in this. It has to keep the lines of access open to the providers of top TV content, but it has to make good on its promise of serving viewers. So far, it has done a great job, but at some point, it’s going to be forced to do something that will begin to tarnish its brand. I don’t personally think the Boxee removal qualifies — only a few tens of thousands of us are nerdy enough to have hacked our Apple TVs — but sometime soon, somebody at Viacom or Fox or Sony Pictures will recall content that was previously available. Expect it to happen around sweeps weeks or the season finale weeks. It’s gonna get ugly.

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Everyone’s a video producer now, are you?

February 19, 2009

I’m spending a few days at the Omniture Summit in Salt Lake City. Yesterday I was invited to speak on the topic of (what else?) video,  along with Jeff Jordan from Omniture and Carmen Sutter of Warner Music. It was somewhat of a follow-up to an Omniture Webinar Jeff and I did in December.

It was a great session — Carmen shared some fabulous details about how they use video to keep fans connected to Warner Music artists. (Two fun facts worth sharing: 1) Fan-submitted videos represent a significant number of the videos on the artists’ sites, but account for only 5% of views, as Carmen explained it: “Fans came to see the bands, not each other.”; 2) People who use the audio player on the site rarely ever also watch videos, she attributed it to an age thing, the bands that attract young audiences have fans that want to watch stuff, the bands with more aged followers have fans that have yet to catch on to video but understand streaming audio.)

In the Q&A someone raised the very valid point that everyone’s talking about how video is the next big thing, but nobody’s talking about how hard and expensive it is to produce decent-quality video.

That’s a question I’m uniquely positioned to answer because I paid my way through my (first) grad school by being a video production guy and later video editor at a traditional analog video edit suite. I’ll skip the nerdy details, but I know a lot about how hard it is to shoot good video on the cheap. 

I answered the question by saying that it’s true that good video is costly to produce. However, there is a subtle way to at least minimize cost and that is by identifying what “personality” you want your videos to convey. Once you have a style and a personality that your videos will adhere to, it removes a lot of the uncertainty in the production process. Reduced uncertainty=more manageable costs. The Blendtec guy is probably the easiest example to cite: once he decided that his approach was the mock-serious lab coat in front of a locked-down camera, that settled all the production decisions from there forward. (Never mind that it costs him a few hundred dollars to blend an iPhone.)

The second point to come out of that discussion was that by having a distinct personality, you train your viewers to expect that from you and you build the likelihood that — for those who like the personality you conveyed — they’ll want to return to see more. This, by the way, is exactly what major Hollywood producers and directors do. You’ve seen one J.J. Abrams piece, you’ve seen them all (or, in my case, you’ll want to see them all).

Anyway, it’s great timing to be talking about who has what it takes to become a video producer because Daisy Whitney at TV Week did her New Media Minute about this very topic, showcasing a variety of Internet video projects that try to do exactly this. Watch and learn — thanks for sharing, Daisy!

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Online TV show ads in peril?

February 13, 2009

A few weeks back I asked you for evidence of whether online advertising was showing signs of growing or shrinking. I got some feedback, but none of a smoking gun. Then I spent a few sick days watching a lot of Hulu on my TV screen. I mean, a lot. (I even took a brief look at that Heroes movie with Henry Winkler and Sally Fields that keeps showing up in my recommendations queue for obvious reasons. Talk about a very obvious database-matching exercise gone awry.)

If you haven’t watched Hulu lately, check it out. Are you seeing as many PSAs as I am? I didn’t know the Air Force had so many ads to show. And I didn’t know there were that many eco-friendly organizations as I’ve met lately on Hulu.

I’m even talking about top shows like The Office or House. Is it possible they aren’t selling out their inventory on these great shows? Gratefully, I was spared the flood of PSAs once I started catching up on Battlestar Galactica (BSG). Sponsored by DirecTV, BSG affords a perfect example of online video advertising done right. Yes, DirecTV sponsors the whole show, but each ad is different. Featuring John Michael Higgins in the fictional board room of a generic cable company in panic, these ads deliver. They’re so funny they actually make me wish that satellite TV wasn’t headed for the sidelines.

But brilliant touches like these are few and far between. Again, I’m asking you: is online TV advertising in danger of failing to support this fledging new medium upon which so many millions of us have become dependent?


Roku’s next steps: Hulu, then Yahoo TV Widgets

February 12, 2009

If you read this blog often, you know I’ve been road-testing a lot of set top boxes for the past two years. I do this because I cover video, but also because it’s a disruptive moment in the history of the video and if there’s lessons to be learned about disruptive innovation, this market provides ample opportunity to be tutored. (All props to Clay Christensen at HBS, by the way, for defining the way we all look at disruptive innovation. That’s worthy of a separate post at a later date.)

After spending significant time with the Roku box during some recent sick days, I have concluded that the Roku is still the box that delivers the most punch, especially considering its price. That’s why the Roku box won our Convenience Quotient analysis on set tops last summer and it’s only getting better as the Roku team adds more content. 

The Roku is the only box that I want more than one of — one for the living room and one for the family room.

But it still has a long row to hoe if it’s going to end up in a million homes. In particular, I see a threat in the form of connected TVs. I’m writing a piece for Forrester on that topic right now, should be out in a few weeks, but the conclusion is pretty optimistic: thanks to supply-side energy, the Yahoo TV Widget space is making it likely that connected TVs will be in more than a million homes by year-end, possibly two million.  

So here’s my prescription for Roku to stay in this game. I haven’t discussed these things with the team there, but I’ll make them a matter of public record so that if I’m right or wrong, at least I’ve been bold.

1 – Get going on Hulu. This might mean starting with CBS (which is dramatically more open to radical syndication moves, as evidenced by the YouTube relationship) or Viacom, as a way to show Hulu that this is the way things are moving. The sooner ad-supported TV shows up on Roku, the sooner it’s a must-have $99 box for everyone.

2 – Become the first set-top box to implement Yahoo TV Widgets. I cannot get this widgets solution out of my mind. It’s such an elegant way to open the market to innovation and I like innovation. From what I’ve learned from the people in charge of the Yahoo TV Widgets strategy, the code to accomodate the widgets should be relatively simple to put on the moderately powered Roku box. But the beauty of having widgets on the Roku box is it would immediately relieve Roku of needing to strike separate content deals with every possible content provider. Instead, it can just let content providers develop whatever they want for the platform, making the box more valuable with each passing day. 

The fact is, every box, DVD player, TV, and game system (Wii Widgets?) will eventually implement Yahoo TV Widgets. (I know that’s music to Yahoo’s ears, but when you do the right thing strategically, it tends to work.) So Roku better hurry. 

Last thought: once these steps have been conquered, it’s time to start courting HBO and other pay TV providers to discuss delivering subscription-based content to the Roku. Not something HBO wants to do (not something Comcast wants it to do), but it’s where things are heading. And as long as HBO is priced higher on the Roku than it would be through Comcast, which is certainly what HBO would have to do, it might be feasible by 2010. 

What do you think?


Sick day with my Boxee-enabled AppleTV

February 12, 2009

Sorry for the radio silence on my blog. I’ve been down for a few days with the same thing everyone else seems to have. But since I’m a workaholic I had to get some value out of my sick time so I spent as many hours as I could watching TV, movies, and miscellaneous video. All in the name of research, of course.

A few things I learned:

  1. The Roku Player’s HD quality is surprisingly good. The upgrade happened earlier this year. Yes, I have hit a few buffering issues as many predicted would be the case — even though I’m on fiber and wired ethernet. But the quality is still sharp and the selection, thanks to Netflix, is expanding dramatically. My wife is getting her Jane Austen fix, my kids are watching all the kids shows they want, and I’m catching everything from PBS documentaries to Clash of the Titans (what kid rasied in that era doesn’t want to see Clash of the Titans again). Not all of that content is available in HD, but we don’t seem to care.
  2. HD DVRs are a pain. I don’t even record The Office and 30 Rock in HD anymore because it takes up way too much space and those aren’t shows that need HD quality to be funny. Lost, Heroes, and Fringe are all still on my HD list, of course. Even nerds have their standards. 
  3. My Boxee-hacked AppleTV seriously rocks. I mean seriously. With Hulu in there, I did a ton of catching up, including things that were already recorded on my DVR, but with faster access to them on the AppleTV I found it more convenient (if you know me, you know convenience is my watchword) to watch via Boxee. I also started really playing with the personal media sharing that Boxee enables from the home network. It’s as clumsy as most other home-media sharing solutions, but I can see it getting better. Now if Boxee only had a business model. But it is now available in Alpha for Windows, so we’ll see how far it can go before it needs some revenue.

Most of all, I have learned that if I needed to buy a second of any these devices, I would buy the Roku. It’s a bit of an act of faith, on the assumption that more content is coming (a separate post on that coming later). But the price is right and we spend hours watching it. Having a second one for the other TV room makes sense. It’s cheaper than the premium you’d pay to build Netflix into an LG or Vizio TV, and it’s more flexible. But I get ahead of myself, I’ll post on that as a separate topic later today.


Why Hulu’s Super Bowl ad is as smart as it is funny

February 4, 2009

I’ve been answering press questions about Super Bowl advertising for a decade or more, both as an analyst and as an academic (used to teach advertising management at Syracuse back in the good old 90s when your only way to watch Super Bowl ads was on TV or VCR). It seems that every year I’ve been involved the press stories say the same thing: Ads cost too much and aren’t as good as they used to be. 

Once in a while, an ad comes along that is brilliant. That brilliance is usually measured on the funny-meter, however. Rarely does it mean that a product has been properly promomted.

That’s what makes the “Huluwood” ad from Hulu featuring Alec Baldwin so brilliant. Not only is it funny, but it actually accomplishes a very subtle yet powerful marketing objective. Watch the commercial, have a few laughs, then read on.

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Why is this ad so good? Because it positions Hulu in exactly the right light. Instead of trying to say that Hulu is some kind of new service “unlike anything you’ve ever seen before,” this commercial makes it clear that Hulu is just TV, taken to the max. Which is exactly what people want. They don’t want Gemini Division, they don’t want LonelyGirl15. They want Lost and Family Guy and The Office. And they want it whenever and wherever they want. This is exactly what Hulu gives them and it’s the USP (unique selling proposition, sorry, I’m slipping back into professor mode, I can almost smell the classroom now) the ad delivers.

Personal riff: I absolutely love the new phase in Alec Baldwin’s career that this commercial epitomizes. From the guy who first interpreted Jack Ryan on the big screen in Hunt for Red October to this slightly hefty but immensely comedic persona that 30 Rock unleashed, I think he’s a million times more interesting now than he ever was in his movie star days. I don’t know how big a role Tina Fey had in bringing this out of him, but I assume she had a role because she is, after all, a genius.


Looking for evidence that the online video ad market is tightening

February 4, 2009

Daisy Whitney’s New Media Minute is out this week and in addition to discussing the basics of fair use (a supposed “safe harbor” in the world of YouTube video production that won’t, in fact, turn out to help as many people as hope it might), she opens with a brief discussion of how online video producers are starting to back away from producing online videos on spec. Instead, they want advertisers signed up from the get go — the way that Electric Farm Entertainment (EFE) NBC produced the NBC-distributed non-hit Gemini Division, for example. (Amended to reflect Brent’s comments below,5 Feb).

See Daisy’s video below for more details. This could mean the market is maturing. It could also mean the market is getting tougher and people don’t want to spend in hopes of later payoff. For my part, this is causing me to finally step out and address the big question that has been hanging over online video since the market crashed in October: Is the market for online video advertising tightening? Are advertisers — once eager to spend a 50% premium on a CPM basis to reach ABC.com or Hulu.com audiences — going to pull back from this medium simply because cuts are coming across the board? I say this in an environment where broadcasters expect a bloodbath on the upfronts later this year — the same upfronts where a lot of online video sponsorships are presold (think Sprint + Heroes). 

It’s time to collect the evidence. What are you seeing? What conversations are you party to where people are cutting back on online video? Or are you hearing people get smart about it and realize that an online buy is still less-cluttered and more-targeted than other TV buys? I’d love to hear specifics, anonymous or not. Have at it.

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