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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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  11. Didn’t we all just know it? Just look at who owns Hulu: Comcast and broadcasters. Why would they continue to dilute their own business model? Hulu was never going to be the Napster of video. Just enjoy the free trial period before it becomes even more commercial laden and costly, i.e. an internet version of cable today.

    http://cordcutterguide.com/

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  12. Tom Nowicki Tuesday, May 1, 2012

    I think it’s more likely that Hulu would put up the cable authentication layer up just for its “free” content. I think they would leave Hulu plus untouched. They just want people paying for content one way or another. If this allows Hulu regular to be accessed on multiple devices (iPad, mobile) then it would actually be a win for the 91% of us who subscribe to cable in the US.

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  13. The cord cutters should pay for cable – the consumer will have to “chip-in” with advertisers and support the creation of content – not just pay for the distribution path.

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    1. I do support the creation of content – I pay for Hulu Plus, I pay for Netflix, I pay for movies I go see in the theater, I pay for episodes of things I can’t get any other way on iTunes. I object to the idea that I should also have to support the cable industry if that model does not and has not ever worked for me. If people can’t figure out how to make content pay, that’s the fault of the industry, not my problem.

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  14. Ric Sansand Tuesday, May 1, 2012

    RIP Hulu. I actually thought you were going to ‘innovate,’ but alas its just not to be. When the content world gets it through its THICK skull that the old delivery and monetary system is obsolete? I cut the cord over 15 years ago and its one of the smartest things I have ever done.

    Hey US consumer, show these schmucks where to get off just like you did the music industry.

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  15. Can’t get blood out of a turnip … I can’t afford Satellite or Cable … I can barely afford what I have … if I have to give up Hulu … so be it!

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  16. All of this is fine until you recall that no content is created free. Think of your entertainment like your dinner on the table. It didn’t start on the table or in the fridge or at the store or even at the distributor. So, when you want more of it where is it going to suddenly appear from? Your desire to have the end product doesn’t justify taking it without creating avenues–read paying– for the creative processes to be upheld–read compensated for years spent honing their craft to make such wonderfully designed and professionally appealing content.

    If your article was suddenly being reprinted hundred of thousands of times in books, mags, reread on radios, cable and on the big screen, I am sure your perspective about the electronic umbilical would greatly change.

    Pay for your entertainment. Period.

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  17. You assume that you have a ‘right’ to someone else’s work. Why are you against a content creator selling directly to their audience? Would you prevent a small business person from selling directly to their customers too, and only let them sell thru intermediaries like, say, Google and Amazon?

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  18. Hello Amazon!!!!!!

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  19. Internet shall slay TV. Nobody with half a brain would pay $120.00 a month for 240 shitty cable channels, and maybe 1 or 2 good ones, if they knew they had another option.

    I have broadband internet for 30 a month, plus 8 for Netflix a month since 2006. Im totally satisfied with that.

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  20. I don’t suppose there’s any way I can BLOCK for FLAG your trollboi post for offensiveness, @Brett Glass – so I’ll just publicly slap your face for it instead.

    Broadcasters want to make money? Fine – we’ll pay for the content…in the way we choose. We’ll even watch ads for the content…in the way we choose. But we see ZERO reason why we should have to have a cable account we don’t need just to prop up Big Cable’s Broken-Ass business model.

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