Hulu Missing Out On The Facebook Sharing Gold Rush

Facebook has super-charged a handful of lucky media companies selected to test-drive the social network’s frictionless sharing platform. But even though video-sharing site Hulu was on the early bird list, it failed to make a splash. Was this bad-luck or a botched strategy?

Recall that Facebook let Hulu and a handful of others unroll an app-based news feature that tells users what media their friends are consuming. The feature amounts to a powerful testimonial and has produced impressive popularity spikes for the Guardian, the Washington Post (NYSE: WPO) and music-service Spotify.

Facebook has so far made this sharing feature available to only 20 or so strategic partners but, starting in January, it plans to open the gate to a crush of other companies that are clamoring to offer sharing apps of their own.

Hulu, one of the chosen early-birds, in September announced that it was offering:

a fully integrated experience that enables you to watch Hulu videos without leaving Facebook. And because you are watching through Facebook, the videos you watch will be instantly shared with your friends if you choose to do so.

But the response to Hulu’s initiative has so far been decidedly overwhelming. Based on my own news stream, no-one is using Hulu’s sharing app (although Facebook tells me three friends have downloaded it). And on the company’s blog post announcing the feature, commentators have complained that it stinks and that it doesn’t actually facilitate sharing. Meanwhile, the tech media have ignored Hulu’s Facebook play altogether and instead focused on whether the sharing feature will save its competitor, Netflix.

What is going on? Why did Hulu decide to unroll a feature that could have given it an important first-mover advantage in social media but then fail to execute?

The most likely explanation is the Video Privacy Protection Act, a 1988 law that forbids video rental services from sharing customers’ rental history without their permission. The law is currently preventing Netflix (NSDQ: NFLX) from hopping onto Facebook’s platform. In Hulu’s case, however, media outlets reported that the company had found a way to work around the law.

The company declined at the time to explain just how it was complying with the VPPA. Hulu did not respond to an email today requesting details about its legal strategy.

It’s also possible that Hulu’s efforts to comply with the law are responsible for the complaints that its sharing feature is not frictionless. The Hulu feature as it’s now designed requires users to leave Facebook and watch content in a separate window — perhaps this additional step is actually a form of legal compliance. I’m at a loss to explain how this would work but I also feel Hulu must have done something to shield itself from the very large lawsuit that would arise if it violated the VPPA.

Whatever the explanation, the upshot is that Hulu may have blown an opportunity to use an early entry on social media to gain ground on Netflix and other video-streaming rivals like Amazon (NSDQ: AMZN) and Veoh.

As for Netflix, the company yesterday told TechCrunch, “Unfortunately US members can not currently connect their Netflix accounts to Facebook because of the ambiguous Video Privacy Protection Act.”

Netflix is trying to amend the law so that video rental companies no longer have to obtain customer consent on each separate occasion they wish to share information.

The House passed a law to this effect this month but the bill still awaits approval from the Senate and the President, meaning it could be months before Facebook users can automatically share their movie choices with friends.