Hulu, Netflix And The Slow Rise of Internet TV

Published 3 years ago by , Updated August 24th, 2013 at 10:07 am,

Earlier this month, Hulu CEO Jason Kilar announced that Viacom content from channels like Comedy Central and MTV were returning to Hulu’s library. But that wasn’t all he said. In a meandering manifesto, Kilar announced Hulu’s intentions of surpassing and eclipsing cable TV for the benefit of viewers, content creators and advertisers alike, implying that the current system was outdated and unmaintainable.

Speculation on why Kilar would make such statements on the Hulu blog and tempt the wrath of his bosses/partners at Disney, NBC Universal and Fox is rampant, but the most likely culprit is Viacom’s half-hearted re-entry into Hulu’s library. Popular shows like The Colbert Report will be delayed three weeks after airing, instead of the customary 24 hours that most shows use.

The move isn’t a surprising one from Viacom, whose forays into digital video have been reluctant at best (they recently lost a high-profile lawsuit against Google over alleged copyright infringement in YouTube’s infancy). The nickel-and-diming tactics of Viacom were probably the straw that broke Kilar’s back, and he vented his frustrations to the world with little thought for his own continuing position.

It’s not hard to see why the CEO is frustrated – tech-savvy viewers have shared such frustrations for years. The biggest deterrent to Hulu’s new subscription service is a lack of premium content. Networks and rights-holders have been slow to add movies and television shows to the libraries of both Hulu and streaming rival Netflix, holding out for the sake of DVD sales and syndication dollars. Worse yet, the availability of content seems to be in constant flux. While both services are regularly adding video, movie collections and shows disappear from the digital libraries with depressing regularity.

Viacom originally pulled out of Hulu in early 2010, leaving millions of viewers without online access to their daily dose of Stewart and Colbert. Just last week it was announced that the The Criterion Collection of critically-acclaimed films would come to Hulu’s Plus service – and disappear from Netflix’s streaming library. Premium cable content from HBO and Showtime is rare on Netflix’s streaming site and non-existent on Hulu Plus.

Sports fans seem to have even less options than normal TV viewers when it comes to internet distribution. The vast majority of sporting events, especially college games, are only available through expensive satellite and cable packages. There is headway on this front, though: Major League Baseball allows fans to view all its games online (for a whopping $100 a year), and rumors persist of a similar deal for NFL fans. For Xbox 360 owners, ESPN 3 has been available for some time.

Then there’s the problem of access. Both Hulu and Netflix are bound by licensing to block access to foreign countries. Netflix has begun adding subscribers in Canada, but due to licensing restrictions, the digital library loses some shows and movies and gains others once you cross the border. Both services have made laudable efforts to be available on new internet-connected set-top boxes like Apple TV, Roku, and newer Tivo models, but not without strenuous negotiations and delays.

At the insistence of its partners, Hulu has blocked access to Google TV, rendering the ambitious service moot for many viewers. If you want Hulu or Netflix streaming on the go, you’re in luck – so long as you use an Apple iDevice. Restrictive anti-piracy efforts have kept both services off of the popular Android and Blackberry platforms for now, and it looks to be several months before any significant progress will be made.

Access to content isn’t the only problem for consumers. 40% of United States residents have no access to broadband internet, making online video services practically unusable. In rural areas, wireless internet from cell phone service providers is often the only solution, bringing with it data and bandwidth caps that make video streaming an expensive proposition. (Yours truly falls into this category – thanks, Verizon.)

Even urban broadband, which has historically been unlimited, is beginning to be metered by providers. Comcast users currently have a generous cap, but Bell Canada customers (and customers of regional service providers using Bell’s infrastructure) were recently limited to 25 gigabytes a month. The restriction will be re-assessed by Canadian regulators in the coming months. Corporate consolidation, like Comcast’s recently completed purchase of NBC, leaves many US regulators and customers keeping a watchful eye out for conflicts of interest.

nbc comcast Hulu, Netflix And The Slow Rise of Internet TV

An online video landscape that seemed to have unlimited potential just two years ago now seems mired in pitfalls and speed bumps. The frustrations of Hulu’s CEO echo those of consumers weary of expensive cable contracts and commercial-saturated television. Licensing issues are the hardest to overcome, and the ball rests squarely in the court of the intellectual property owners. It looks as though content holders and infrastructure providers are successfully holding back the tide of innovation – for now.

Determined cable-cutters are using subscriptions to Netflix or Hulu (or both) to bid farewell to the antiquated premium TV models. What can’t be found on either service can often be purchased or rented from iTunes or Amazon Video. There’s been a massive increase in illegal streaming sites, augmenting torrent and usenet networks that have successfully operated in the depths of the internet for years. While it seems that a true, legal online alternative to a traditional cable subscription is still months or years away, progress is slowly being made to bring television into the 21st century.

Jason Kilar’s days at Hulu might be numbered. His unmistakeably intentional rant hasn’t sat well with industry regulars, meaning that big partnerships with Hulu will be a tough sell with someone so forward-looking at the helm. Disney, Fox and NBC-Comcast will likely leverage their stakes in the small company, continuing to stall the transition to a full IPTV system. But Kilar’s an experienced and driven executive – if he leaves Hulu, expect him to continue to lead the march for ubiquitous digital distribution. Other parties are more than happy to step up when old media fails – game streaming pioneer OnLive is taking steps towards becoming a third major competitor for online streams, to say nothing of completely internet-based startups like Revision 3.

Networks and service providers need to get on the bandwagon now to avoid losing revenue in the short term and relevance in the long term. The future is coming, and no, it won’t be televised.

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  1. all i can say is that i’m stoked for hulu to hit 360′s.

    • Hulu nedds to stay free like always. lets be serious many people advertise on hulu and that how they make their buck. in the begginning whean Hulu did not charge anything they were on top. poeple are sick and tired of paying so much monet for nothing. if hulu wants to stay around they need to stick to the formula ot get stuck with nothing.

  2. Great article. This is all a pain and one reason satellite and cable will be hard to beat is the convenience of having everything available. Going by the article, you’d need Hulu Plus, Netflix, AppleTV, iTunes and Amazon video. What a royal pain in the butt to get everything you want IMHO.

    Vic

  3. If the cable and satellite providers want to move into the 21st century and squash the clearly hated online providers then they need to start offering customers the ability to purchase the channels they want. I’m paying almost 100$ a month to Directv with HD and just HBO and most of the channels I never watch. Music channels, shopping, sports etc….all a waste. Why is TV allowed to make you pay for something you don’t want?

    • I agree. I don’t watch +90% of the channels in my satellite package.

      Vic

    • While I agree with the sentiment about not being forced to take all the channels, what is not understood by the average consumer is that all SATV & CATV providers are NOT created equal and some, SATV and the telcos like Verizon that have entered the CATV business especially, would very much like to offer an ala carte cable tier but are prevented from doing so by media companies like Viacom, NBC universal and Time/Warner and their unethical practice of forced bundling.

      The FCC under Kevin Martin pushed Congress to push such legislation and end the practice and in 2006 a bill was introduced then immediately killed by Nancy Pelosi and the Democrat leadership who took over Congress that year and reaped a huge windfall in campaign cash from the entertainment industry to act on their behalf.

      If you want end the unethical practice of forced bundling, if you ever want to play for only those channels you want, contact your Congressional representative and demand they reintroduce the Cable Choice bill. Here’s and easy way to do it:

      http://www.howcableshouldbe.com/

  4. Makes you wonder with all the commercials lately saying “no provider can sell you channels individually”. I ask why not? Some rule some networks made up because they know their stations programming sucks and no one would buy it would be my guess. Like SpikeTV – I would drop them until they stopped showing non-stop CSI reruns and that fighting crap. Sounds like a great motivator for networks to actually improve their programming or face being dropped by customers.

    We afterall are the reason for their existence – it only stands to reason that we should have a say in what programs are shown and what channels we pay for. Not some antiquated ratings system in the era of DVRs.

    • The sad fact is that package pricing is what the cable and satellite industry is built on. They won’t let customers switch to a la carte programming unless it’s the absolute last resort. What’s even more depressing on the long view is that wireless broadband providers are trying to adopt a modified version of the same system to compensate for an imaginary “bandwidth crunch” – how would you like to pay $2 a month to access YouTube, $5 to access Facebook, and so on?

      Until customers start abandoning cable en mass (which they aren’t, thanks in part to entrenched deals between cable providers and content creators) a la carte programming is a pipe dream.

      • Not true, telcos like Verizon and SATV have been asking for years now to end the practice of forced bundling so they can offer individual channel tiers but it will take an act by Congress to end the anti-trust exemptions Democrats (who’s number one campaign contributors over all are media companies) have created for them and almost had it done in 2006.

        Want to be able to buy channels individually, Verizon, DishNetwork, DirectTV and a a few other cable providers with no connection to content producers are waiting on you, start here:

        http://www.howcableshouldbe.com/

  5. I recently dropped all my premium channels except for hbo and
    nat geo. Between dvr and Netflix I see everything I want. and although the price for broadband is ridiculous (I live just outside Boston so between the corporate offices and over-priced universities my connection is pretty awesome) it will only get worse once cable and satellite providers are pushed into streaming content. Hell, I could see more broadcast networks going the way of comcast/NBC/universal and soon you’ll only get their content if you have their service. That’s gonna suck.

  6. No mention of Google TV’s woes with providers? It’s a good article, but this is SORELY missing.

  7. Paying a whopping $100 to watch MLB games on your laptop isn’t alot buddy. It’s 2011. It’s $209 to watch same games on the tv. More people are watching content mow via laptop or iPhone. It’s just another option. As for Hulu soon as it went to a paid site I haven’t been back since. Plenty of other ways to watch tv shows n movies online without paying a monthly fee for it.

  8. There’s irony in that comment. $100 isn’t a lot, but 8 bucks a month Katie thousands of shows… so you go the free, illegal route… something tells me you wouldn’t pay the hundred bucks.

  9. @Eddie – That merger was closely scrutinized and will remain under a very fine microscope to prevent what you fear. If comcast tries to restrict programming for even a second theyll be in major hot water. Besides that wouldn’t even work as different areas have different cable providers all together.

    • But was it scrutinized as such because of Fear of programing restriction or the fear of lawsuits from prior contracts. Or could they require a subscription for channels that once were free. All of the sudden I have comcast I’m paying $5 extra a month for abc.

  10. So… The internet becomes the new interactive television?

  11. We dropped our provider almost a year ago and picked up an antenna for the attic and a couple of Tivo boxes to record shows. We have Netflix and use Hulu (free version) for a number of shows we enjoy on USA and FX. We were paying over $80/month for 95% of the content we never watched. I’ll not pay for Hulu until it starts offering some serious content. Netflix makes up for what else we miss. Albeit, a year later on most cable shows, but we still get it nonetheless. And while the lifetime purchase for Tivo is $400, it will pay for itself in the end until providers get their sh*t together and start being reasonable about content.

    Excellent article.

  12. I can sympathize with the studios’ resistance to offering everything immediately and free of charge. TV programs cost a lot to produce, so why shouldn’t viewers have to pay? I don’t think ads are enough to make the service profitable.

    Hulu Plus is a step in the right direction. Hulu still offers free shows to get people hooked, yet can make a little money at the same time.

    What I worry about is Hulu’s ability to survive for more than a couple of years while other services are offering as much content, or even more in the case of NetFlix. Hulu will have to offer more than just video content — perhaps some kind of value-added service. Some smaller video and music services are betting that superior interactivity will make up for smaller content libraries. My employer, http://www.fargotube.com, is built on a social network so it lets users interact with the bands and filmmakers while buying their videos and music.

  13. I ditched cable a few months ago and have not looked back. I have an old pc running windows 7 and use the media center to record all my ota shows; I use netflix and “other” means for the few shows I watch outside of the broadcast stations.

    I will never go back to cable. Even if Netflix, Hulu, or whatever is next disappears entirely, I will make due with what I have. It is just not worth it.

    To Hollywood: Maybe it’s time to start cutting production costs? Maybe it’s time the on-screen talent isn’t making over a million an episode? Maybe it’s time to be more concerned with quality and not quantity. I mean, really, do we need six spin-offs of CSI? or 8 different crime drama /medical crime drama shows? The sad fact is the networks and studios have gone off the assumption for years that they can put out whatever crap they want and people will watch it, people will pay for it, they have no choice. No longer.

  14. I am definitely sick and tired of the cable companies and their overpriced services. I don’t mind paying a REASONABLE price for TV, but it has gotten beyond ridiculous with the pricing models. It feels like every month or so the prices go up and the service continues to get worse. I like the convenience of having all my favorite shows available in HD in one place, but I am at the point of giving up on cable and going back to antenna. I would love to use services such Netflix and Hulu to watch cable shows and I would even pay a reasonable fee to watch the shows. Unfortunately the media companies control bandwidth and if they find that people are dropping their TV services to watch shows on the internet, you know damn well that the prices to access the internet will go up…way up.

    • What bugs me is the cost of my cable modem access. I use ZERO services from Comcast beyond a “pipe” to connect me to the internet – and that’s over $60/month? Seems a bit much to me.

      Vic

  15. I dumped cable today. I just couldn’t justify their pricing model. I had the highest package and after the special pricing expired, the price was over $200. Way too much. I dropped television programming altogether and now my bill is $66 dollars for phone and internet. Thats a big saving considering there is only a handful of decent shows on now.

    Now all I have to do is choose between a Boxee or Roku. Any suggestions anyone?