Hulu As It Is

Hulu has been built on the tenet of providing free premium content over the Internet using an advertising based model to first cover costs and secondly generate revenue. And it’s been a pretty successful strategy, allowing Hulu to build a sizable audience.

However, the company is still expected to make a loss of around $33 million this year, despite revenue of $164 million. So naturally the thoughts of those at or near the top of the companies who own and control Hulu have turned to whether a different approach would prove to be better.

Hulu As It Could Be

There has been suggestions in the past that either instead of or as well as the current advertising-based Hulu there could be a subscription-based Hulu. In June, Jonathan Miller, News Corps’ man in charge of digital services, suggested this was a logical destination to be headed for.

Then just a few days ago, News Corps. chairman Rupert Murdoch and NBC Universal CEO Jeff Zucker stated that a subscription model and charging for content was being looked at. Although at that point it seemed to be more wishful thinking than anything, especially on the part of Murdoch who also wants to put his newspapers behind pay walls online.

Paid Hulu Already On Way?

Now, BusinessOfVideo claims to have it on good authority that far from being just an idea for the future, a subscription-based Hulu is already on the way. Sources report that internal beta testing of the system is happening now and the technical details are being worked out.

This is not imminent, with next year being mooted, but it looks like it’s definitely on the way, whether anyone wants it or not. The full details don’t seem to have been worked out yet so this could yet be a good move or a bad move for the company depending on how it chooses to play it.

Conclusions

While I personally prefer online video and television catch-up services to be free, I can see the advantages of a subscription-based model as well. And it’s the “as well” which is key because no one wants to see Hulu moved behind a pay wall lock, stock, and barrel.

However, were a paid-for Hulu (with a reasonable price tag) to be launched alongside the free one with new partners such as cable channels HBO and Showtime then that would tempt more companies online and help prop up the free version at the same time. Which means everyone would win. And even Rupert Murdoch would be happy.

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That 12 billion videos suggest a 45% increase on the same period last year, and shows a very healthy growth in online video. This is both from user-generated sites such as YouTube, and those providing streaming television, such as Hulu.

142 Million Uniques

Ars Technica reports that 142 million unique users watched video online in May, which counts for 74% of the total Internet users in the US, meaning 3 out of 4 people have watched some kind of video online.

The average user watched 85.3 videos during the month, with Google sites coming top of the pile. This includes both Google Video, and the Google-owned YouTube, which as a whole, accounted for 35% of the total videos viewed.

The Rankings

Second was Fox, with MySpace Video, while Yahoo! sites came in third. Hulu, with content contributed by both Fox and NBC, came in tenth, but this meant only 0.7% of the total videos viewed.

Online video continues to grow at a massive rate, with both illegal, and legitimate means of watching video on the Web rising in number on a monthly basis.

The site is currently in beta, and only open to about 18,000 users, but that hasn’t stopped the shit hitting the fan as the company today received a cease and desist letter from NBC, CBS and Fox over the copyrighted clips it is offering.

The letter, leaked by Silicon Alley Insider, claims that Redlasso has broken state and federal laws while causing the companies “serious and irreparable harm.” The companies are demanding an immediate ceasing of all the copyright infringements.

Fair Use?

Up to now, while Redlasso has admitted not having deals with any of the networks, it was working towards them. It also claimed that the clips being shared were covered under the Fair Use clause.

The service is free, with revenue from advertising being split between the company and the producers and owners of the content. Redlasso now has until May 29th to respond to the letter.

Redlasso Responds

What’s strange is that the service has just been covered on Techcrunch, who gave a thumbs-up to the concept. Unfortunately, throughout the interview, Redlasso never once mentioned the cease and desist letter.

In a statement Redlasso said:

“We believe that curtailing distribution through the Redlasso platform only exacerbates a flawed distribution model. We hope to develop mutually beneficially partnerships with the world’s major media companies, including many of those we’ve heard from today.”

A Question Of Control

The problem is that while companies such as NBC and Fox are slowly but surely venturing on to the Web and offering their shows, they still want to be ultimately in control of what is offered, and when through services such as Hulu.

As we’ve already seen with the $1 billion copyright infringement lawsuit brought by Viacom against Google and YouTube, companies will go to any lengths to protect their copyrighted content.

Time To Go Legit

While Redlasso may have been a brilliant service, and one which if legitimate would have proved massively successful, by playing with the big boys, and dismissing the need for copyright deals, it has been badly burned.

I really hope the company now puts its house in order, fights to get those much needed deals in place, and becomes the legal service that many bloggers have been crying out for.

However, it seems there is now an official Hulu channel on YouTube. It was started on March 3rd, but has only now been noticed by The LA Times.

March 3rd places the channel’s launch date just prior to Hulu launching publicly, after it’s trial beta version. So what is a Hulu channel doing on one of, if not the biggest rival it has?

Planned All Along

Hulu spokesperson Christina Lee told NewTeeVee:

“It was absolutely planned by Hulu. We know that there are opportunities to find audiences all over the web. These are short promotional clips and we’re working with NBC and FOX on this.”

Bizarre Yet Clever

It’s true that the clips are only short, but it still seems bizarre to advertise yourself on a rival service, with clips of Family Guy, Saturday Night Live, and The Office all appearing on the channel.

It may be bizarre, but it looks like it’s also a clever move. The channel was the 68th most-viewed channel on the whole of YouTube in April, with 4 million page views.

If only a small minority of those 4 million then click over to Hulu to watch a full episode of the show they’ve just seen a clip of, then Hulu gains a lot more than they’ve lost.

Now the details have been revealed by the big media.

The Financial Times reported (in its trademark salmon-colored pages) that Apple and 20th Century Fox, a entity held by Rupert Murdoch’s News Corp, inked a deal that would grant iTunes users the option to rent films produced by the studio.

The news of the impending partnership comes in anticipation of the consumer-centric conference to be held at Moscone West in San Francisco, California.

Share Prices Immediately Up

An immediate result of the announcement was the journey of Apple’s share price on the NASDAQ exchange north of $200 for a short while Wednesday. The stock fell to 198.95 by the closing bell, and today (as of 10AM EST) spends its first few hours in play at about $202.

Apple CEO Steve Jobs presumably welcomes very much the bullish attitude investors have portrayed as the company approaches zero hour and the head himself prepares (with classically specialistic attention paid to the minutiae of the his hallmark Keynote presentation in particular) for the Expo to take place from January 14 through 18.

Macworld Expo

Though Macworld Expos of years past have traditionally been points in time in which Apple (previously known officially as Apple Computer, Inc) has debuted new and/or refreshed hardware offerings and staples, next month’s event is likely to be spent by the Cupertino-based company promoting advances in software. 

Hence the chatter about the expected emergence of digital, over-the-Web video rentals.

Whether Apple can seduce production studios large and small in addition to 20th Century Fox will of course determine the likelihood of the storefront’s success. 

Video Not iTunes Strong Point

While iTunes music has sold at a brisk rate for the past couple of years, its video selection – comprised of feature films, television programs, and those clips once broadcasted by the MTV network – has shown to have a far less notable trajectory.

They do sell, mind you. The TV catalogue in particular has garnered considerable attention since its small (though ambitious) beginnings. Only, on the whole, they take a distant back seat to the storefront’s digital audio warehouse.

But there’s has been ample evidence as of late that the desire for on-demand Internet solutions has grown quite a bit. 

The sheer idea of iTunes movie rentals has stirred bloggers ever since Apple introduced its Front Row media software (and later its Apple TV set-top box) to formulate predictions as to when the Man in Black and Blue will “do things right,” as it were, and establish an alternative or partnership to/with Netflix or some other movie subscription service.

Clearly the answer to such inquiries is now writ large across the Net: the moment is soon to arrive.

Time Sensitive Distribution?

Unfortunately, if the Financial Times is eminently correct in its assertion that Apple will work with an arrangement that involves the time-sensitive distribution of film titles to iTunes users via its rental system-to-be, the debut to come in mid-January may well be met with mixed reviews. 

The “time-sensitive” concept has long lost its acceptance among consumers. Instead, the Netflix-like pay-per-month-and-keep-a-set-number-of-films-indefinitely has become the new norm.

Our own assumption as to what we can expect to arrive as an iTunes update next month is that the release will be met with begrudging disappointment (but acceptance still). 

Though Mr Jobs is tasked with pleasing the content providers as much as his own company’s customer base today, the fact that inconvenient compromises will have to be made by potential renters to satisfy their demands will mean any approval of the new move is bound to be less than wholehearted.

Paul Glazowski is a contributing author discussing the social networking world, his work can be found on Profy.com

Most of these, or at least the ones I have read, were on the negative side, mainly because NBC have seen fit to build so many prohibitions and limitations in, that NBC Direct becomes a pointless exercise.

Only For Americans

To use the NBC Direct service, you first need to be in the US, which I’m not, so that rules me out straight away. Like Hulu and The Daily Show Archives before it, licensing and rights management mean only people currently resident in America can access the videos on offer.

I know licensing is important, but that doesn’t make me, as a Brit, sitting here wanting to watch episodes of Heroes, and The Office, feel any better about being effectively banned from access.

Although it makes sense from a short term business aspect, surely companies such as Fox and NBC realise that for internet television and video on demand to continue growing, the world needs to be in on it, not just one country.

That’s surely the whole point of the web, to be a global community, with no borders or barriers placed on it.

Only For IE Users

Which brings me on to the second frustrating limitation put on NBC Direct users. You are only welcome if you have Internet Explorer 7 and Windows Media Player installed on your computer.

I have Media Player, but I choose to use Firefox as my browser, because it’s more secure, easier to use, and has a nicer feel to it. I refuse to be forced to use IE, just because a company thinks that I should do to access their service.

This also immediately rules out any Mac users from being able to access NBC Direct, which love or loathe the Apple brigade, seems a tad unfair.

Self Destruct & Limited Availability

So let’s assume you pass all of the tests NBC have required you to: You are a US citizen; you have a PC; you are running Internet Explorer; you are running Windows Media Player; you have everything updated sufficiently. So you download some episodes from NBC Direct.

The problem then is you only have 48 hours to watch them before they self destruct, and the episodes are only available for up to seven days after they air on television in the first place. Man, talk about jumping through hoops…

Conclusions

Like Hulu before it, NBC Direct has failed to grasp the fundamental fact that the world is getting smaller, and that its not only US citizens who want to be able to watch television programmes online.

Until a big network gives internet users more choice, not only about where they live, but also what software they use on their computers, services such as these will be too limited to truly revolutionise people’s viewing habits.

comScore, one of the world’s leading digital entertainment surveyors, has revealed its latest Video Metrix report for May 2007, which showed that nearly 75% of all Americans watch video online during said month.

Not surprisingly, YouTube, the undisputed king of video content on the web, topped the list of places to watch, with 35 percent of users tuning in to 1.8 billion streams during the four-week period. Fox Interactive Media ranked second with 8.1 percent (680 million streams), while Yahoo! Sites earned bronze with a 4.6 percent share and 387 million streams.

Other notable statistics from comScore’s research include that online viewers watched an average of 158 minutes of streaming each; the average clip was 2.5 minutes long, and that the average online viewer consumed 63 videos during May – more than two per day.

In terms made simpler to compute, that works out as a whole lot of Paul Potts, Crazy Women Drivers and prank calling.

Via [comScore]

This deal is interesting because it allows syndication of Fox content throughout the internet using embedded video. Fox will handle advertising for all content displayed in the Brightcove player. Fox Entertainment Group’s content will extend beyond just Fox’s websites.

Brightcove has existing agreements with major players like CBS, MTV Networks, and Discovery, although none have been exclusive. This new deal is for Fox’s exclusive online partnership. You won’t be seeing Fox content on YouTube anytime soon.

Content is king for internet video. This is a major deal for Brightcove, which is aiming to ink similar exclusive partnerships with other major networks and companies.

Although unclear the law leans in favor of content owner so if you linked to copyrighted material and don’t take it down you could very well lose a legal battle and face huge legal fees. Even blogs are at risk!

A large number of cases never reach the courts where sites are served with takedown notices and dare not risk ignoring them as they may otherwise face liability.

In case you havn’t noticed there have been a number of directories popping up that link to full TV shows that are available online through video sharing sites such as YouTube and DailyMotion.

A few examples are All About South Park, Daily Motion Episodes and IPTV To Me, and apparently under US law all these sites are illegal. One such site has been targeted by Fox and asked to shut down, this site is QuickSilverScreen.