Anyone familiar with the evolution of Hulu has long been aware of the video portal’s variable business model. Their alternating strategies have been due in part to ongoing attempts to circumvent revenue loss caused by sites where pirated TV shows and movies can be accessed for free. As the networks’ answer to the dilemma, Hulu was initially designed to offer viewers a legal alternative to watching videos via the web, but the business model is constantly being reevaluated to keep up with the public’s progressive shift toward digital entertainment, as was observed in a recent article in the Wall Street Journal.
Authors Sam Schechner and Jessica E. Vascellaro astutely predicted that the “digital revolution is poised to shake up TV in earnest” in 2011. As viewers, we are becoming more and more obsessed with convenience, so we’re flocking to the Internet to get our TV and movie fixes for the same reason that the concept behind TiVo is so popular. We want to watch our favorite shows on our own time, not the networks’, and now that we’ve tasted the bliss of settling down on any given night to watch a full episode of Glee that originally aired however many days before, we’re naturally never going to settle for anything less from here on out. Mobile devises like the iPad and Apple TV, as well as a host of smart phones are already catering to this demand, providing viewers with all-access television on the go.
According to the article, “…industry executives say a generation of TV watchers may never sign up for cable or satellite television, turning off the spigot of monthly fees that have helped support TV for over 30 years. Broadcasters such as those behind Hulu, cable TV operators, and even TV hardware makers such as Sony Electronics are scrambling to figure out their role in the new Internet television universe.”
The article reported some pretty staggering findings corroborating the above assertion, stating that at least 335,000 fewer households were paying for television service between the first and third quarters of 2010, according to research conducted by SNL Kagan. Internet viewing, by comparison has gone up 96% in last year’s fourth quarter, with Hulu’s own viewership doubling.
Considering all this, it’s really no wonder, in my opinion, that Hulu’s CEO Jason Kilar and its corporate owners—NBC Universal, News Corp., and Disney—seem to be constantly at odds over the website’s direction. Recent talks have been about structuring a new “online cable operator” business model, because the networks have seen that Hulu’s free, ad-supported service has been cutting into their own ad-generated revenues from their respective websites.
Obviously, the whole setup is counterproductive if Hulu’s success equates to declining revenues for its own owners. There’s a parallel example in the whole “digital revolution” undercutting TV’s 30-year reign, and that example is that times are changing and current services have to change with it or be left behind.