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Summary:

The rumors that Hulu may soon require subscribers to have a cable TV subscription is the perfect cautionary tale for why the companies that make and distribute content shouldn’t own the pipes that deliver that content.

tv-desert

The rumors that Hulu may soon require subscribers to have a cable TV subscription is the perfect cautionary tale for why the companies that make and distribute content shouldn’t own the pipes that deliver that content. And if the rumors are true, it’s not just a cautionary tale, it’s the new playbook by which pay TV providers will force consumers to buy a special pipe for “the Internet” and a second pipe for TV, despite the fact that technically they are becoming the same thing.

There is no denying that as the future of television unfolds it’s disrupting the traditional broadcast, cable TV and content creation models. And while the Senate held a hearing last week to discuss this shift, it felt like they were arriving late to the party, unaware of just how much things were changing as broadband and television converged. Instead of understanding what that convergence meant for the economics of old and new industries and what regulations might be needed to avoid protectionist behavior by pay TV providers and broadcasters, the hearing dealt more with discussions around reworking the Telecommunications Act of 1996 for the current era.

That’s not going to happen anytime soon, but I did wonder at the lack of Hulu in the conversation occurring last week at the Capitol. Netflix was brought up several times as was Aereo, both companies which are challenging the current status quo far more than Hulu has been able to. Not that Hulu didn’t have promise. When it launched in 2007 it defied expectations and was a wonderful viewing experience, especially for those of us who wanted just to get our content when we wanted it without having to plan ahead to record it or worry that we missed some window online.

But even a year ago we were saying that as a business Hulu wasn’t delivering the revenue its backers may have hoped for, and that a cable authentication model might end up making the most sense. Already Fox windows its content on Hulu, showing episodes 7 days later for customers who aren’t already DirectTV Dish subscribers. So if it went further and mandated that subscribers could only access the content if they were already a pay TV subscriber somewhere, it would really be a win for everyone except the consumer.

The pay TV provider wins because cord cutters like myself now have one less source of entertainment, broadcasters who back Hulu win because customers are essentially paying Hulu for the right to watch certain shows, while they are also hunting for retransmission fees for their broadcast channels on cable. They are getting paid by consumers, by Pay TV providers and they are also getting their spectrum for free even as they sue to stop companies such as Aero from making it easier for consumers to get those signals over the air. It’s also training consumers that they will have to pay extra for access to a bunch of content on their own terms.

And is all this happening because it’s more difficult or expensive to deliver TV to consumers? No. It’s actually cheaper and easier once TV moves to an IP system to deliver what people want, when they want it on demand. But once this happens, if there are no artificially created barriers in place thanks to licensing deals, deals to let content sneak around a data cap or outright packet blocking, then consumers might go over the top and along the way distort the power structure and economics of the TV industry. And no one in the industry wants that.

  1. This would be such an epic fail by Hulu. The vast majority of its subscribers pay for Hulu Plus specifically because they DON’T want to pay for cable TV. I know I would quickly cancel my subscription.

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    1. The NYP article indicates to me that it’s the free Hulu model that will start requiring authentication. Which I still think is asinine, but it sounds to me like it’s an effort separate from Hulu Plus.

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  2. I don’t think too many consumers know of or care about Aereo. It was probably only discussed because investor and board member Barry Diller pitched it to the FCC.

    Regarding Hulu, the writing’s been on the wall. And I’m going back to physical media, where I can share, resell, and rewatch without worrying about an Internet controlled by the studio system.

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    1. Right. Don’t you remember how DVDs used to make you watch 7 previews before you could see your movie? I had to put the disc in, press Play and then go arrange the sock drawer to avoid that crap.

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    2. Zach Weigand Tuesday, May 1, 2012

      So do you think this includes Hulu+ subscriptions? Or is it just for those watching things for free?

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  3. If “It’s actually cheaper and easier once TV moves to an IP system to deliver what people want”, and won’t it be cheaper and easier for new competitors to enter the wireless space?

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  4. Brad Schultz Monday, April 30, 2012

    Funny how the individual networks with their own over-the-top distribution aren’t the ones driving this. HBO, MLB, etc. I can’t imagine HULU making this shift for ALL of their programming.

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  5. I personally have no trouble paying for the creation of the entertainment that I enjoy. Where I start to have trouble is when I have to pay multiple times for the same thing because I have the audacity to want to access it in multiple formats/locations/devices.

    But I get it — this is really just a troll post, so you’re not actually interested in actual discourse, just in your personal strawmen.

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  6. Nathan Betzen Monday, April 30, 2012

    As Gabe Newell has said, piracy is a service problem. This sure as heck looks like content providers getting in the way of providing a better service. Net result…?

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    1. That is just what I was thinking. People want their content delivered in a manner that suits them. The more difficult it is made for the end user, the more likely they will take the path of least resistance, PIRACY.

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  7. I recently became a cord cutter and would be perfectly happy even without Hulu. I already can’t get my precious favorite NFL team out of market so all the content I want I get via ROKU and Apple TV. My biggest frustration are bandwidth caps which I hope to circumvent by getting business class cable.

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  8. I feel like the oatmeal sums this whole situation up nicely…
    http://theoatmeal.com/comics/game_of_thrones

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  10. Never have had cable, never plan on having it…if Hulu moves this direction, I’ll use Netflix, Amazon, and Redbox more…also, I expect the quality of independently produced shows to continue to improve, and with sites like Kickstarter, quality entertainment can be created to compete with the mega-companies, who may find their audiences decreasing as folks find better and free content elsewhere.

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