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Is Hulu Plus Another Nail in the DVD Coffin?

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The launch of Hulu Plus earlier this week has many people rethinking the business models for paid video content on the web and what their effect will be on other businesses. Some see Hulu Plus as a potential Netflix killer, or even a cable killer. But the business that Hulu Plus is most likely to destroy, at least in the near term, is the market for full-season collections of TV shows on DVD.

Consider “Lost”: The sixth and final season of the popular ABC (s DIS) TV show is available for pre-order on today for $38.99, and the “Complete Collection” DVD package is selling for a (heavily discounted) price of $148.99. So a fan could pay that price and be able to watch the series whenever he or she wanted on a TV or PC. Or they could pay $10 a month to Hulu Plus for access to the same content on a PC, iPad, iPhone and TV through Samsung TVs, or Blu-ray players and other CE devices coming soon.

Just as there are fans who still buy CDs — and in some cases LPs — to have the physical media and accompanying liner notes, there will always be hardcore fans that want the extras that come with packaged DVDs. (The “Lost” Complete Collection comes with a ton of collectible goodies, such as the “Senet” game characters played in Season 6, an island replica, a full episode guide and a black light.) But there are even more consumers who don’t need additional memorabilia from a certain TV show and would be just as happy with access to the show media alone.

This was the big bet that Apple (s AAPL) made with its iTunes music store, and it’s finally paying off — digital sales of music in the U.S. are expected to eclipse CD sales by the end of this year. Due to the popularity of the iPod and iPhone, and the ease of being able to take a wide range of music on the go, consumers went with convenience and price as the main reasons for switching to digital downloads of their music.

In a similar way, digital access to movies and TV shows may soon eclipse sales of DVDs and other packaged media, particularly as consumers are able to access that content directly on TVs, Blu-ray players and mobile devices. While the electronic sell-through market has been slow to fully develop, Netflix (s NFLX) has built a robust business around subscription-based pricing for streaming video services — a business that has rapidly expanded since becoming available on more consumer electronics devices.

In many cases, Netflix doesn’t have access to the latest episodes or full seasons that Hulu Plus does, meaning it has had little impact on DVD sales for full TV seasons so far. But with a full slate of nearly all popular broadcast TV programs, Hulu Plus seems poised to nip away at the incremental revenues that shows like “Lost,” “The Office,” “24” and others make through DVDs.

Related content on GigaOM Pro: ESPN Leads the Way Over the Top, But Will Others Follow? (subscription required)

13 Responses to “Is Hulu Plus Another Nail in the DVD Coffin?”

  1. I love hulu and unless something bad happens with hulu ths is what i am doing. I will use free tv at home then i have my 7 dollars and change a month subscription to watch the other stuff i want to watch when i want to see something saving me tons of money. So i am hoping that hulu continues what they do.the only real problem i see is that when everyone figures this out they will ditch their cable tv and come to hulu subscription which will drive up price. But i will enjoy while i can.

  2. Hulu isn’t going to replace DVD sales. If some one likes a show enough to buy a DVD their not going to settle for watching it online. Online still isn’t convenient enough and the video streaming speed is still to slow. TV is a great thing for most people and I don’t think their ready to throw it away yet.

    Tye Banks

    • Online isn’t convenient enough? In comparison to what? Going out and buying or renting a DVD? That’s more convenient that simply ordering it online???

      Video streaming speed is still too slow? In comparison to what? Waiting for the DVD maker to accept your order, ship it to you, and the Post Office deliver it? You driving to your local video rental store and buying/renting a DVD? By the time you get into your car, drive to the video store, spend time browsing their selection, drive back, and put the DVD into your DVD player, you could have downloaded/streamed a number of DVDs.

      And who said anything about throwing away one’s TV? All … let me repeat that … ALL TV makers are making their TVs internet-compatible. What does that mean? In some way or fashion (cables or wireless), either your TV directly connects to the internet (requiring your TV to essentially be a computer itself to search, download, and store/stream what you want to watch) and/or to your internet-connected computer (which simply doubles as your DVR). Essentially, the idea is to make all your TVs in your house computer monitors. And ALL computer monitor companies are now actively pitching their flat-screen computer monitors as good replacements for your TVs.

      What is happening is the merging of two systems into one. Before there were broadcast and cable TV which were separate from your computer and the internet. The unstoppable trend is to merge those two into one.

      • David

        Scott, by “video streaming speed”, the previous poster means their internet connection speed. If that speed is too slow, or the network is clogged or patchy, then the streaming content won’t play. DVDs don’t depend on a consistent high-speed broadband connection in order to work.

        Also, the wireless plans needed to stream HD TV over a smartphone or mobile device are expensive and most mobile carriers are (or are considering) putting 2GB limits on monthly bandwidth usage. After you reach your limit, no more streaming content for you, even if you’re paying big bucks plus a Hulu subscription to get it.

        Personally, I only rent DVDs for the extras and haven’t bought one in years, but arriers need to work out a lot of kinks before streaming content kills the DVD dead.

      • Well look at like this. Most people don’t even know about Hulu. Yes there is a lot of people who do but you have to remember most people (especially younger kids) use their cell phones to get online. The connection isn’t great in a lot of places for cellphones despite the 4g claims. So most aren’t going to be watching whole series of shows on a small hand device.

  3. A lot of times I’ll not buy movies because I know that they will always be available either on Netflix or my HBO OnDemand. Why take up more space with another DVD case of a movie I won’t really watch again, at least for a year or two?

  4. Artruro Jayson

    If movie files can retain the format of the menus, extras, easter eggs, chapters, and so on exactly as DVDs have it now, but without the physical disk, meaning for download as a single file instead of only the raw movie file, then that would be the way to go in my opinion.

    Any definition format, such as Blu-ray, is fine, only it’s time maybe to get rid of the shiny disks. I had too many of them when Napster showed up. But the authoring format is still the way to go.

    And until any amount of streaming offers that it won’t compete with what viewers want.

  5. I don’t think Hulu Plus kills much of anything. While we all enjoy the novelty and freedom of “watch anywhere” content, the simple truth is that the quality of the content simply doesn’t compare to DVD and certainly not with Blu-Ray.

    Sure it will get the job done for a curious viewer who wants to see what all the LOST fuss was about, but until we get broadband speeds comparable to Asia, web based programming will continue to be “good enough” but not quite “good” yet.

    The quality of streamed video content is, IMHO, relative to your options. MLB.TV, even with their HD plug in, pales in comparison to the signal that cable provides. And even’s player, which I’ve personally praised since its launch, doesn’t deliver the clarity and detail that a DVD of LOST does.

    For the foreseeable future, web based video content should be focused on what enables us to do and the freedom it provides, not what devices or subscriptions is replaces. Today, we’re at “in addition to” and not “instead of.”

    Hulu Plus, Netflix, and MLB.TV are all great, but none of them make me want to cut the cord just yet.