Boxee Vs. Hulu History

It was almost a year ago when Hulu decided to pull its content from Boxee. TV.com also lost out. The decision was made after the networks and cable companies declared they didn’t like the way their premium content was being viewed on television via Boxee via Hulu.

In essence, they were only happy with Hulu while it remained a computer-only affair. Boxee enabled Hulu to be experienced on TVs and that just wouldn’t do as it may influence people’s decision to cancel their cable subscriptions in favor of online video.

Boxee responded by issuing a workaround to the Hulu block. Which Hulu then plugged, only for Boxee to unplug it. The cat and mouse game has continued since then, with some Boxee users able to watch Hulu programming and others not.

NBC Explains To Congress

Congress is holding a hearing concerning Comcast’s proposed acquisition of NBC Universal. And it was during this that Jeff Zucker, President and CEO of NBC, was asked about Hulu blocking Boxee users from accessing its programming.

Zucker was clearly surprised by the line of questioning and faltered the answer:

“This was a decision made by the Hulu management to, uh, what Boxee was doing was illegally taking the content that was on Hulu without any business deal. And, you know, all, all the, we have several distributors, actually many distributors of the Hulu content that we have legal distribution deals with so we don’t preclude distribution deals. What we preclude are those who illegally take that content.”

He was then asked whether NBC would negotiate with Boxee, to which he replied, “We have always said that we’re open to negotiations.”

Why Hulu Is Wrong

Zucker, and consequently Hulu, is fundamentally wrong on this one. As Boxee explains in a measured blog response, Boxee accesses content using a Web browser. There is no taking of video, no adding of adverts. In fact, it works exactly the same way as Internet Explorer, Firefox, Chrome, and the Hulu Desktop.

And yet Boxee has been singled out for exclusion from access while Microsoft, Mozilla, Google and the rest happily act as a go-between without any of these so-called “legal distribution deals” in place that Zucker referred to.

Conclusions

There is absolutely no logic to Hulu’s continued banning of Boxee. And Zucker’s response to the question about it and Boxee’s explanation of why he is wrong frame the issue in as succinct a way as possible.

Let’s hope Hulu and Boxee either do now come to some arrangement or that Congress pushes further for an explanation of the issues involved. Because it makes no sense whatsoever, especially as Boxee would increase Hulu’s potential audience.

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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Hulu – Hot and Getting Hotter

Being British, I’m jealous of Americans for one reason and one reason alone – Hulu. Yes, we get to watch BBC programming on the iPlayer, and there are a number of other online TV catch-up services either already present or about to launch in the U.K. But Hulu offers American television at its best.

Hulu is massively popular in the States, having around 40 million viewers at the last count, who between them watched nigh on 500 million video streams. Which is surely cause for celebration amongst the partners behind the project.

Viewing Figures Vs. Revenue

However, viewing figures will only get you so far, with it all coming down to revenue and profit in the end. And on this score Hulu is still failing to score big. It’s estimated that the company will make losses of around $33 million from expected revenue of $164 million in 2009.

And this clearly isn’t pleasing the head honchos at NBC, News Corps. or Disney, the last partner to join. In particular, and rather unsurprisingly, News Corps. chairman Rupert Murdoch doesn’t seem to enamored with the current situation. And NBC Universal CEO Jeff Zucker agrees.

Content Partners Speak

According to Multichannel News, both spoke at the Goldman Sachs Communacopia conference on Sept. 15. Murdoch started by suggesting that Hulu is being eyed with alternative forms of revenue channels in mind. He said:

“Are we looking at it with a view toward adding subscription services and pay per view? Yes we are. No decisions have been made yet.”

While Zucker seemed less sure pay models were the future but also didn’t rule them out, particularly in the long-term. He said:

“I don’t think anyone predicted we would be this far along after 18 months. We are ahead of plan and we have more than 200 advertisers at Hulu.”

“We are going to continue to be as innovative as anyone on monetization of the ad-supported model, that’s really where our focus is today.”

“Whether there are other ways to monetize Hulu down the road, it is something that we are open to, something we will explore, but there are no plans at this time.”

Could A Pay Hulu Work?

There are clearly people out there willing to pay for content over the Web, with streaming rentals and digital copies selling well across the Internet. However, that’s not how Hulu has been set up and I can see a lot of people dumping the service without a second thought if they were suddenly asked to pay for the privilege of using it.

It’s likely to be many years before online video advertising catches up with TV revenue, if ever. But does that mean the advertising-based model should be abandoned? Especially as top-rated shows such as The Simpsons and CSI can command higher CPM advertising rates on Hulu and the like than they can on traditional TV.

Money Is Everything?

It’s a sad fact of life that money is of the utmost importance in almost everything we do. Being in relationships, having kids, and enjoying life are all directly influenced by money. And of course, jobs and the art of business thrive or otherwise on how much money is generated.

Almost every decision taken can be influenced by money, how much you have, how much you want, how much it’ll cost, how much it’ll make. Television is no exception. Whether a show gets canceled or recommissioned comes down to how many people are watching, and consequently, how much revenue it is drawing in.

Online Video Revenue

Therefore, it stands to reason that online video, particularly that supplied by traditional media and television companies is also dependent on the same market forces. Unfortunately, so far at least, online video is failing to pay its way.

YouTube has found it hard to monetize its content, partly due to a dearth of video advertising opportunities, and partly because monetizing user-generated content is a sticking point. This has led to battles with record labels and the PRS over revenue share, with the former arguing the money just isn’t there to share in the first place.

Hulu and Boxee Battling

Even more profound than that is the still-raging battle between Hulu and Boxee. Boxee allows its users to view online video on their televisions in an user-friendly, optimized-for-television format. Hulu was one of the services streamed through Boxee until Hulu decided to cut support last month. Since then, the two companies have been playing a cat and mouse game.

The reasons for Hulu’s move to curtail Boxee are as yet unconfirmed. But NBC Universal CEO Jeff Zucker summed up the problem in his Digital Hollywood keynote speech last week.

Jeff Zucker Speaks

He said:

“What we’ve lost in viewers and advertising dollars on the analog side isn’t being made up for at all on the digital side. We want to find an economic model that makes sense.”

Clearly Hulu is a (so far) unprofitable venture that the networks are willing to experiment with. After all, they really don’t have much to lose assuming people who are now watching on their computers wouldn’t have watched on their televisions otherwise.

But Boxee obviously throws a spanner in the works on that score, enabling viewers to watch Hulu programming on their televisions as easily as they would watch content directly from NBC. Which clearly isn’t pleasing bosses at NBC at a time when online revenues aren’t a patch on traditional television revenues.

Conclusions

Until advertising revenues on Web video and television start to match or come close to those experienced on traditional television, I find it hard to see how online video will succeed. If money is the all-important factor, which it currently seems to be, then media companies are going to protect their most important revenue streams. And those aren’t online.

Hulu Vs. TV.com

Hulu, the joint venture between NBC and News Corporation, has had an incredible run of success since launch. It has grown substantially, and gone from having zero traffic to 75 million visits a month. Hulu viewers tend to be loyal and very happy with the service.

TV.com, one of the most sought-after domain names in the world, used to be an information source with added community features such as forums. You’d basically use it for finding out about the latest episode of your favorite TV show.

But after being part of the CBS acquisition of CNet last year, TV.com has evolved into something much more. As well as the old features having remained, the site has been turned into a portal for online video, with episodic content abounding.

Hulu Content Pulled

Up until now, premium Hulu content such as Heroes and Family Guy has been syndicated on TV.com. But TV.com viewers suddenly noticed Hulu videos being watched through the site had a ‘Video Unavailable’ notice on them. The content, it seemed, had been pulled.

Hulu has now confirmed the videos have been removed, but its statement fails to offer any insight as to why the sudden move has been made.

“Hulu has contractual rights with regards to our relationship with TV.com and we are exercising those rights. Out of respect for their confidentiality, we will not disclose our discussions.”

But, Why?

There would seem to be a few possible reasons for the sudden pulling of Hulu content but whatever the true reason, it seems to have taken CBS and TV.com by surprise. It could be an argument over licensing and revenue levels. CBS currently makes 10 percent of advertising revenue generated by Hulu content viewed on TV.com.

But it’s much more likely, at least in my view, that Hulu has decided it can no longer afford to provide content to what could end up being serious competition. TV.com already had around 16 million visits a month even when it was just a community based site with no content. Since the relaunch in January, traffic is estimated to have risen 263 percent.

Conclusions

TV.com may still be a long way behind Hulu in terms of visitor numbers, but it’s on an upward trend, and Hulu can’t afford to allow it to catch up. Hulu’s rise to the top has been fast but it now faces having to defend that lead from the chasing pack. Pulling its content from the competition would seem an obvious first move.

Here are my highlights of 2008 in the world of Web TV, with the two or three most fascinating or biggest stories from each month of the year. I wonder if 2009 will hold equal delights?

January

The year began with speculation as to whether Joost would survive the year. And despite a dodgy economy and bumps along the way, it has managed it. Meanwhile, there was an intriguing story concerning how BitTorrent wasn’t being used just by pirates to swap illegal wares.

February

Blu-ray finally won the battle of the high-definition formats but would it really matter in the end when digital downloads were surely the future? Quarterlife made its NBC TV debut and unfortunately didn’t do very well, proving Web video still has a way to go before mainstream acceptance is guaranteed.

March

Hulu launched in beta, and we had a full and frank look at what it offered.

YouTube founder Steve Chen argued that vetting videos uploaded to the site would ruin the immediacy. While a Web-based Joost was first rumored, a rumor which came true later in the year.

April

The month began with YouTube delivering the ultimate RickRoll. Then the popular torrent tracker Demonoid came back online after six months. The photo-sharing site Flickr launched video, which didn’t really cut the mustard and even lead to a user revolt.

May

The Roku player launched, with a budget price of just $99. It has since moved on from its initial use as a Netflix-only service provider. There were also predictions about the future of online video, with one billion users guesstimated in five years time.

June

Should Google kill YouTube? was the question that screamed from the page in June. But a look at the successful phenomenon that is Fred shows why YouTube is important to the health of the Web. Meanwhile, the BBC launched iPlayer 2.0, a vast improvement on the original.

July

This month saw the release of The Dark Knight, the new Batman movie. Keeping it pirate-free for 38 hours was regarded as a huge success but once it hit the Web, The Pirate Bay used it to taunt Hollywood. Meanwhile, Google described monetizing YouTube as “the Holy Grail”.

August

August was all about the Beijing Olympics. A delayed opening ceremony on NBC forced many people to the Web. Torrents proved massively popular, while in the end, the online coverage failed to make any serious money. Back to the drawing board for London 2012 then.

September

Avril Lavigne’s Girlfriend became the first video to break the 100 million views mark on YouTube. A video streaming site launched using The Pirate Bay’s popularity to gain traffic. While it looked as though the MPAA secretly killed off Peekvid when no-one was looking.

October

October saw my second attempt to explain my frustrations at having most premium video services denied me due to territorial rights licensing. While Steve Jobs describing Apple TV as a hobby lead to questions regarding whether set-top boxes will ever become essential?

November

It emerged that Hulu was set to match YouTube for profits despite enjoying a lot less traffic. Meanwhile, a man committed suicide live on Justin.tv, turning lifecasting into deathcasting.

December

December finally saw YouTube go HD after months of almost getting there but never quite managing it. This correlated with a feeling that the Google-owned site was growing up. Meanwhile, The Dark Knight was announced as the most pirated movie of the year.

Certainly the Web portion of NBC’s offerings didn’t make as much money for the company as it would have liked. But whose fault was that?

$5.75 Million Revenue?

According to The Wall Street Journal, research firm eMarketer Inc estimates that NBCOlympics.com will have generated only about $5.75 million in video advertising revenue for the American television network.

We’ve spoken about video advertising and the difficulty in monetizing Web video a lot here on Web TV Wire, and that difficulty has seemed to rear its ugly head yet again for the Olympics.

Severe Restrictions

So what did NBC do wrong? Well certainly the delivery system annoyed many potential viewers. Microsoft’s Silverlight may be technically superior to Adobe Flash but many don’t like the restrictions it places on who can and cannot watch video streams.

There was also a strictness involved in the inability to share and embed videos on external sites other than NBCOlympics.com as well, which surely must have limited the potential for picking up extra viewers (and consequently extra revenue) along the way.

Delayed Broadcasting

Then there is the obvious fact that NBC shot itself in the foot by limiting and delaying footage of some of the key Olympics events, including the opening ceremony and the 100m sprint final, until it could air on traditional TV.

There are some obvious lessons to be learnt here as the potential for Web video coverage of global events such as the Olympics and the World Cup increases over the next few years.

Lessons For The Future

The main thing would be to think of the audience as one entity rather than dividing it up so clearly between those who watch on television and those who watch on the Internet. As usual, the Web viewers were treated as second class citizens.

Hopefully NBC and the other companies eager to embrace the Web as a television delivery method will get it right for London 2012. And video advertising may have increased in popularity enormously by then also, making it a profitable venture at last.

NBC spent the run-up to the Olympics in China talking up its extensive coverage of the Games.

And with over 2,200 hours of footage being made available online, it certainly had a right to brag.

Technical Issues Galore

Unfortunately, there have been technical limitations and issues surrounding the online coverage. This means viewers not only need to have Vista to watch any footage, but also have no firewall installed on their PC.

Broadcast delays to stop any loss of viewers and advertising from traditional TV have also affected Web viewer numbers, with many finding alternative (and often illegal) methods of watching their favourite event.

Even when viewers do get the chance to watch coverage of the Games on NBC’s site, they are often faced with footage without any kind of commentary, poor quality video, or even an event location but no action taking place.

Yahoo Sports Win

The company is doing fantastically well in terms of television coverage, but the online portion of its offerings has told a different story.

Yahoo Sports dedicated Olympic website has actually achieved better visitor numbers so far than NBC has. Over the first three days of the Olympics, Yahoo managed 1.3 million more visitors than NBC’s site did.

NBC Happy

NBC is far from unhappy though, with Gary Zenkel, president of NBC Olympics telling Wired:

“These record numbers validate our multiplatform strategy. They drive viewers to share in the Olympic experience on network television in record numbers.”

“And as a result of this unprecedented digital effort, consumers have a destination to watch thousands of hours of video and relive the great moments of these Olympics.”

Lessons For The Future

NBC is probably happy because in terms of its priorities, it has achieved what it set out to. It has fostered Web video viewers for the future while at the same time not putting its lucrative TV coverage at risk due to a conflict of interests.

London 2012 could be very different. Not only will NBC have had the chance to iron out the technical issues that have blighted this Games, but online advertising may have increased to a level to compare with that of traditional television.

• UK Users: Watch the Olympics Online at the BBC website
• U.S Users: Watch the Olympics Online at the NBC website

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The event that really showed this lack of respect for viewers was the 100 metres sprint final, a showcase event for as long as the Olympics has been running (a very long time).

Bottled Lightning

Usain ‘Lightning’ Bolt won convincingly, setting a new world record and still having time to celebrate his win in the last quarter of the race, looking left and right, and thumping his chest.

But people using NBCOlympics.com weren’t able to see this landmark event as it was one of the occasions, just like the opening ceremony, where coverage was held up and not shown online until hours later.

Delays Disappointing

While Jeff Zucker, President of NBC Universal may be proud of the online offerings his company has provided for Beijing 2008, many viewers aren’t happy at being forced to miss live coverage of certain key events.

I really hope NBC learn from the reactions to the live coverage it has provided this time around and change its strategy for next time. The amount of footage is great, but the delivery and method leave a lot to be desired.

• NBCOlympics.com Will Stream Olympic Games but With Restrictions
• UK Users: Watch the Olympics Online at the BBC website
• U.S Users: Watch the Olympics Online at the NBC website
• NBC Olympics Live Online Coverage To Be Used As Research Lab For Future Multimedia Events
• Will NBC Free Olympic Coverage Be Successful? | Media Mogul John Malone Thinks It Is Absurd
• Pirate Olympics: Alternative Ways to Watch The Olympics

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The Olympic Games is proving to be a big hit for the promotion of Web and mobile video, with official figures from the beginning of this week showing that online video traffic for the Games is up massively.

Huge Increase On Monday

Nielsen’s viewing figures for NBCOlympics.com show a huge increase from the amount of people watching on the Internet over the weekend compared to Monday.

According to the figures, the three day opening weekend of the Olympics saw only up to about 850,000 visitors to the site. Monday saw that number rise massively to over 2 million.

Naughty People At Work

This is being explained by people watching the videos streams while at work. Although bosses may not like the idea, it seems their employees are finding ways around the filters that companies usually put in place to prevent this.

Mobile Video Viewing

Mobile video viewing figures also rose sharply, hitting almost half a million on Monday. NBC told CNet that it “was stunned” by the amount of people using their mobile phones to access online video streams.

This is all great news for the future of Web-based video distribution as we really need the uptake of the services to increase to persuade big media companies such as NBC that the Internet is where their future lies.

Revenue Still A Problem

Viewing figures seem to be up, but that is of course only half the battle. For American television networks to really embrace online video, there has to be money in it, and that is still the sticking point for most.

When even market leader (and Google-owned) YouTube is failing to fully get to grips with monetizing its video content, what hope is there for companies with less experience in the online advertising sector?

• NBCOlympics.com Will Stream Olympic Games but With Restrictions
• UK Users: Watch the Olympics Online at the BBC website
• U.S Users: Watch the Olympics Online at the NBC website
• NBC Olympics Live Online Coverage To Be Used As Research Lab For Future Multimedia Events
• Will NBC Free Olympic Coverage Be Successful? | Media Mogul John Malone Thinks It Is Absurd
• Pirate Olympics: Alternative Ways to Watch The Olympics

Related Ad

Buy the ‘Beijing Olympics 2008′ game for the PS3 from Amazon