Disney/ABC joins Hulu: What it Means

April 30, 2009

Today Disney and Hulu confirmed the long-running rumor that Disney would join News Corp. and NBC Universal as equity partners in the most successful professional video content site. According to the Wall Street Journal, Disney will take an equal share by ponying up a similar amount of cash that the prior equity investors put in. 

I applaud this move. It’s going to bring short-term and long-term benefits to the industry. This move:

  • Creates needed short-term online advertising efficiency. I’ve recently written a report for Forrester about the struggles of online TV shows, including Hulu, when advertisers are cutting back every expense. By joining forces and standardizing the ad buying process, ad formatting, pricing, and so many other friction-laden processes, these major networks are going to keep some portion of ad revenue that might otherwise have been lost.
  • Keeps YouTube on the professional video sidelines. YouTube had made a good effort to bolster its online TV show offerings with some CBS content and some links to ABC. But it hasn’t been enough to change what users expect from YouTube. (Tidbit: While YouTube accounts for nearly half of all video views, it only accounts for less than a fourth of video minutes because people go there for short clips.) With ABC clearly aligned with Hulu, it makes it less likely that any of these players will care to sustain YouTube’s online TV ambitions in the future.
  • Makes it nearly impossible for CBS not to join. CBS has invested millions in its own effort and it may not want to give that up. But so did ABC — in fact, ABC was really the boldest of the networks in terms of technology investment and strategic energy. With the other 3 networks heading down the yellow brick road arm in arm, it makes sense for CBS to benefit from the same market power Hulu will now command.
  • Sets up the cable industry for Hulu 2.0. If you’re paying attention, you have noticed that neither Hulu nor ABC have shown up on the Xbox, the Roku player, Blu-ray, Connected TV or any other over-the-top solution. This is because they are saving themselves for the cable industry. They don’t want to upset the cable industry, sure, but more importantly they want to position themselves to partner with cable to deliver Hulu 2.0 to the cable subscriber. Where Hulu 1.0 will remain free for online viewers, Hulu 2.0 will provide not just 4 episodes of a TV show, but all the seasons of the show to date, plus back seasons, and even new release movies. And all of this will be available online as well as on the TV. That experience will be available to premium cable subscribers and the revenue will be shared back to Hulu. 

What do you think it means? For content players, device makers, consumers?


The mobile Web: The future of TV remote control

April 24, 2009

Hands up, anybody who has ever controlled their TV, DVR, game console, DVD player, or other fancy video gadget using the Web rather than a maze of slow clicks on an old infrared remote control.

Anybody? Congratulations, both of you.

I’ve been playing with Verizon’s newly updated Web-based remote control feature to do exactly that and I’m telling you, it’s sweet. Sorry that most of you aren’t FiOS TV subscribers so you won’t be able to try it, but for the few who are, give it a trial run.

You have to have an HD DVR and you have to sign up first, but within 24 hours they’ll get you up and running. You can then log in and control your DVR from your PC. If you’ve ever fallen asleep waiting for your DVR to respond to your remote control as you wade through a labyrinth of menu options, you’ll appreciate the speed and efficiency of this solution. 

verizon-webdvr

Here you see me deleting yet another episode of Bob the Builder, all in the name of research.

Controlling complex TV equipment from the PC is a no-brainer — the next step will be to port all of that control to the mobile phone.

To wit, I’ve been playing with the iPhone app that controls the Boxee player (which as faithful readers will know I have placed on my hacked Apple TV with much rejoicing).  Boxee is relatively simple to control with the Apple TV remote (though I  my kids keep losing the tiny thing) so it’s not like you need to turn to the iPhone app, but why not? Once you start getting the hang of controlling things from a more intuitive interface (the PC with a mouse, the iPhone with its touch surface), it makes you realize that the future of living room control is not to have a $500 Logitech universal remote or even to put a touch screen on your TV set. It’s much simpler than that — we’ll all just use our mobile phones to control our TVs, DVRs, game consoles, and everything else CE makers conspire to place in our living rooms. And that control can be live, as in, here’s what I want to watch right now, or offline, as in, let’s delete all of those Palladia concerts I recorded in HD while I was convalescing that now consume half the DVR hard drive (sorry, Neal Peart and the rest of the Rush gang).

Once we have a protocol for letting mobile devices speak to the TV, they won’t be limited to simple command and control functions. Here are a few scenarios that I can easily conjure:

  1. Want to play Uno on the TV? Okay, you might prefer harder fare when you think of card games. Either way, we can’t play card games at our house until the little ones are in bed because they gnash and tear at the cards. In fact, we can’t play card games at our house after they go to bed because of aforementioned history of gnashing and tearing has depleted our card reserves. But in a mobile-controlled TV world, bent cards are a thing of the past. Imagine if each player could employ their own mobile phone as their hand. The TV can keep the draw pile, the tableau, or whatever else the game requires.
  2. Let me share my photos with you. Today people share pictures and video taken on their mobiles by gathering around the 3-inch screen or posting them on Facebook. But nothing’s more immediate than “publishing” my photos directly to your Connected TV or cable set top box when I drop by for a visit, either over wi-fi or the 3G network. And if I can share photos with your TV from my iPhone, why can’t I also “publish” my mp3 playlist to your surround sound speakers?
  3. Need a keyboard, anyone? As more and more of your friends get Connected TVs and are joining chat rooms to swap ideas about the latest episode of Fringe while it’s airing live, you’ll be the one who doesn’t have to use a cumbersome USB keyboard to add your $.02 to the chat. With an iPhone or Android app that speaks to your Connected TV, you’ll be good to go — whether to enter a username and password or for constructing lengthy analyses of Agent Dunham’s wardrobe.    

Your turn, I’m sure you have better ideas of what such a mobile-controlled TV world could be like. Add your comments and let’s see what rises to the top.


Apple TV vs. Roku vs. SlingBox

April 16, 2009

NOTE: This post is nearly four years old but continues to get traffic, enjoy the read, though I shut down comments years ago because of spam, sorry. In the meantime, please check out my book, Digital Disruption, published Feb 2013 at forr.com/DDbook.

Original post:

This is now the third post I’ve written where I’ve confessed that some unscheduled downtime for health reasons proved to be a marvelous excuse to lay on the couch and watch a lot of TV shows and movies. In my case, I can also claim it’s research because I have to try out all the gadgets in my video setup, which keep changing thanks to upgrades. So in my most recent (and hopefully final) hiatus, I spent some quality time with the Apple TV (hacked to include Boxee), the Roku (recently enhanced with Amazon Unbox capability), and the SlingBox + SlingCatcher combination. Some thoughts:

  • Apple TV still doesn’t float my boat. I did an extensive post on this some weeks back lamenting the fact that this box doesn’t do more than it does because despite repeated attempts to give it a break, I still only find it handy for two things: 1) watching movie previews (which I’m a sucker for, especially anticipating the summer releases), and 2) watching Hulu thanks to Boxee. Now that Boxee has added Pandora streaming — brilliant move, guys — it’s even that much more interesting to me. I personally believe this “hobby” — as Jobs and others at Apple keep calling this product — is headed for the trash pile unless it finds a way to stream ad-supported video and then builds an iPhone-like app store to allow 3rd party development for the box.
  • Roku + Unbox doesn’t do much for me. I’ve written extensively about Roku’s sucker punch, its $99 Netflix box that is so easy to use that it is flying off of Roku’s shelves. And I was genuinely interested in the Amazon Unbox upgrade that happened a few weeks back because I wanted to see how well it was integrated into the experience. The integration is smooth and elegant. However, I found myself questioning the value of the addition. At my fingertips I have 3 ways to get movies on demand: my cable system, Apple TV, and my Roku + Amazon. And they all have similar problems — it’s hard to navigate that many movies effectively unless you’re looking for an obvious choice like the Dark Knight. Though I will admit I used the Roku the most of the three boxes, 99% of it was spent trawling through our queue of 150 Netflix Watch Instantly titles. The fruit: I strongly recommend The Diving Bell and the Butterfly, a haunting and poignant true tale of a man who suffered a massive stroke that left him with only the use of one eye. Run, don’t walk, to your nearest Netflix Watch Instantly option. While there, do everything you can to avoid Sphere, yet another Sharon Stone movie you don’t need to see.
  • SlingBox + SlingCatcher. The SlingCatcher is a loaner from the people at Sling. I’ve used a demo before and was fully aware of its features, but there is something to be said for having it in your home for an extended visit. Here’s what I learned: 1) the people at Sling can do more with video quality over limited bandwidth than anyone I’ve dealt with. I’ve always been impressed with the SlingPlayer’s ability to give me great quality video over wireless connections at home or on the road. But the SlingCatcher has to do one more thing, it has to be able to sling portions of your computer screen to the SlingCatcher. I fully expected the quality of this experience to be subpar. Uh-huh. It’s remarkable. Take a standard size Hulu window, tell your SlingCatcher you want to sling the video to your TV screen and boom, in a few seconds you’re watching full-screen web video from your computer on your TV with no wires attached. Genius. It’s also relatively impractical, however, so as much as I was thrilled to do it, I haven’t done it spontaneously.

By spontaneous, I mean, when I say to myself, “Hmm, I want to watch some video,” the three responses my brain offers are: the PC, the DVR, and the Roku Box, in that order (the DVR follows the PC because with six children, the competition for the DVR is pretty intense). The others don’t come into it unless I’m trying to test something or my first three options are occupied. Lately, I’ve started supplementing that list with some DVR cheating via SlingBox (no need for SlingCatcher), where I can use my PC to snoop in on the DVR while the kids play the Wii or watch a Blues Clues DVD.

I pay close attention to that spontaneous response because it’s the beginning of a habit that will eventually form.

My habits will form differently than yours (you probably don’t have six wonderful children to shape your environment as I do), so it’s not important what my habits are or even what yours are, but what they are in aggregate. To that end, I will keep surveying our fellow citizens to see what habits are emerging. In the meantime, what early habits and preferences are emerging in your life?


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.


Another case of disappearing content: Hulu cuts popular TV show

January 15, 2009

In an unusual — and very welcome — case of transparency, Hulu CEO Jason Kilar this week posted a frank blog entry apologizing for removing several seasons of episodes of It’s Always Sunny in Philadelphia. This FX Networks’ comedy was pulled down at the network’s request, presumably because it hopes to build some momentum for it’s official Sunny site where many episodes can still be seen. Hulu viewers complained, Hulu asked FX for an extension, and FX granted it. (It may help that FX and Hulu are both connected to Fox, which owns the former and has a hand in the latter). The episodes are now back on Hulu through the 25th of January.  

Two quick things to learn from this experience:

1 – We’re still making this up as we go along. FX, Hulu, and the viewers are all still very new to this idea of watching TV online. FX changed its mind half way through the season, Hulu is required to comply, and viewers are left picking up the pieces. Kilar’s approach — the frank apology — is as disarming as it is astute. That kind of transparency is helpful when negotiating the tricky bumps in a relationship. It doesn’t ultimately solve the problem, however, that content has been disappearing from sites for the last several months as content owners continue to change their minds about their strategies. 

2 – Consumers feel like they hold the ultimate trump card: piracy. If you read the comments from Hulu viewers on the Hulu blog post, you’ll find that most of them — although pleased with Kilar’s openness — are more than willing to threaten piracy as a solution to the problem. This is the same kind of response I get from commenters on my blog when these issues come up. It’s hard to say whether they represent most of us — as I posted before, we know that only 10% of US adults have ever pirated video via bittorrent. But we also know that online piracy will only get easier (and better) until eventually the US will have to contend with it they way some other markets (like Korea, China, etc.) already have. 

The comment I added on the Hulu blog is fairly direct: isn’t threatening piracy akin to telling your spouse that if he/she doesn’t want to be intimate with you that you’ll just sleep with someone else? I have a feeling it doesn’t encourage the behavior you really want! I have been in meetings with studio copyright lawyers when they hear of threats like that and it just blinds them to their more strategic alternatives. This may be one of the reasons that Netflix is succeeding in getting more and more content approved for its streaming service. The subscription model satisfies the studios’ desire to get paid and the consumer’s desire for a convenient, uninterrupted experience.

Is there a future Hulu subscription model hovering on the horizon? What do you think?


Sezmi opens the door to a new kind of set top box

January 9, 2009

I have written a lot over the past two years about the future of the set top box, both on the cable and satellite side as well as on the consumer retail side. On the consumer retail side, there are boxes that are designed to simulate the cable DVR experience like those sold by TiVo (and as announced at CES this week, by Digeo). And there are those designed to provide over-the-top video experiences like the Roku Netflix player, the Apple TV, and the like. 

Though TiVo has tried to provide the best of both worlds — its DVRs can play a wide variety of over-the-top content from online streams to Amazon Unbox video on demand — because it requires a cable subscription, it ends up feeling like a more expensive version of cable.

So far, no one has seriously offered a DVR that doesn’t require cable or satellite service, even though 60% of what people watch is offered for free, over the air, via antenna. And in most major markets, it’s broadcast in HD.

Let’s do some thinking: imagine a DVR that pulls down CBS, ABC, NBC, FOX and PBS from the air, in HD quality, so you have continuous access to the vast majority of content you are interested in. You pay no subscription for this content. And because you’re one of the 62% of US households with broadband, you also have access to millions of online video experiences, some of which are free and others — like Blockbuster OnDemand and Amazon UnBox — are pay-per view experiences that are at least as good as what cable offers, with the extra advantage that they can be managed with a PC.

This DVR could be sold at retail for a few hundred bucks. It would carry no subscription fees and for at least 20% of the population, it could replace cable. Only the people who have to have Showtime and HBO would be left out in the cold, as long as ESPN, Discovery, and CNN keep putting so much of their content online.

Welcome to the world of Sezmi (as in “open Sezmi” — cute, eh?): an over-the-air DVR that adds online video. And if my estimations are correct, you’ll be seeing Sezmi sold by major retailers later this year.

sezmiThink about it — for those of us who spend $100 a month on cable, wouldn’t Sezmi’s value proposition be a great relief? That’s what Sezmi is banking on and the retail partners it’s in hushed conversations with here at CES. I sat down with Sezmi yesterday in their private suite at the Venetian (much nicer than my discount room at the Sahara, I’ll confess). This is a company I’ve been following since they were just a rumor in mid-2007 and were called Building B. They re-branded as Sezmi in 2008 and I last met them at NAB last year where they talked about offering their set top box to tier 2 telcos as a way to compete with cable without having to lay miles of fiber. At the time, I told them that the telco solution was nice, but that I thought they stood a chance of offering this box at retail and that 20% of the population would be interested. That’s 22 million households. That’s more people than have an iPhone. In other words, it’s a target worth pursuing.

Imagine how pleased I was yesterday to hear that they are pursuing both avenues aggressively — working with telcos as well as going straight to retail. I have no doubt we’ll see the boxes in retail later this year. And I’ll be one of the first customers in line. In my case, I won’t be replacing cable, I’ll be adding TV to another room of the house that currently doesn’t have it. That’s a use case I haven’t even modeled and would potentially open a much bigger target audience. Even those economics are attractive, because the additional DVR in my spare room would run me $14 a month — more than $150 a year. One Sezmi box, even if it were priced at $300 would pay for itself after two years of use.

This is Sezmi’s potential even without considering the very elegant consumer interface their box offers or the potential solution they have to solve the ESPN, Discovery, even Showtime problem over time.

Too bad Sezmi wasn’t in retail for this past holiday season. In the words of one retailer who is in talks with Sezmi: “If we had this thing in stores last October as the recession hit, we would probably have 5% market share right now.”

Agreed.


Samsung adds Yahoo Widgets to its TVs

January 6, 2009

In yet another Pre-CES announcement — eerily similar to the one I blogged about yesterday when LG pre-announced that it was putting Netflix into some of its HDTVs — Samsung late yesterday announced it was putting the Yahoo Widget Channel into some of its 2009 HDTVs. Rather than online video delivery like LG announced, this channel will be an interactive ticker that will provide layers of information (read: traffic, weather, shopping) as well as opportunities to augment TV shows with application widgets.  

Let’s see: Internet content, easily delivered to the TV. TiVo, Roku, SlingCatcher, LG, Boxee, now Yahoo and Samsung. I sense a trend here, no?

In fact, I spent some time taping CES interviews with CNBC that will roll out over the week. Like every other press outlet, they wanted to know what I expected the big trends to be this year. I had to confess that the big trends are mostly going to be the same trends that we saw at last year’s CES. Only this year, they would matter.

That’s not to say that Sony and HP’s Net-connected TVs weren’t important trailblazers on the path to the future, they were. Even Verizon FiOS, which has been playing with TV widgets for two years now, was a critical first explorer of this new territory. But their wagons have bogged down in the mud and LG and Samsung are building a nice little interstate behind them. 

The big difference between these announcements from LG and Samsung and prior efforts is that the 2009 solutions are based on open content that already has an audience. Netflix has 9 million subscribers who want that content. Yahoo provides toolbars and web experiences to millions of people each day. Plus, both solutions will gradually be augmented by adding more open content experiences such that the TV is worth one thing the day you buy it, and more later down the road when the additional content and widgets are added.

It’s the culmination of many things I’ve been writing about, so obviously I’m excited about it. However, a sober note is always in order. I’m not suggesting Samsung will sell a million of these. Even between LG and Samsung, they won’t sell a million this year. TVs just don’t sell that fast. But learning from these examples, everyone else who makes TVs will work out similar solutions (dare I ask once again for a Hulu TV?). And Blu-ray and even DVD makers will do the same. Soon, there won’t be a TV maker who doesn’t offer this connectivity; that includes Vizio, in my opinion, who will clearly see the writing on the wall here. In fact, if Vizio announces something innovative early, it could really maintain its growth position in the US market. 

Specific to TVs, my public prediction from 2008 was that in 2013, 40% of all TVs sold that year will have Net connectivity. After that period, the number will rise rapidly, not even because all people will want that, but because — like the digital camera in your cell phone — TV makers will find it easier to include Net connectivity than to exclude it.

Stay tuned for more CES announcements throughout this week. I am on CES-lite this year, only spending two days there, but will have ample opportunity to spot the best and brightest in the world of video.