The Hulu Effect on TVs

By Paul Gagnon, DisplaySearch

If ever there was a time when the delivery and consumption of premium video content was being up-ended, it is now. Many websites, including the popular Hulu.com (News Corp, NBC Universal and Walt Disney owned), have offered so-called catch-up video services where popular TV shows were viewable online after the original had aired through traditional broadcast or pay-TV distribution channels. The problem is that these ad-supported sites don’t earn nearly the same revenue as broadcast distribution, and at the same time, cannibalize those same shows. Why?

In this DVR era, consumers have become accustomed to viewing their favorite shows on their schedule. In addition, the shift in music consumption to personal devices and away from home audio systems indicates that busy lives are dictating where they consume the content as well as when. You’re probably just as likely, if not more likely, to spend time in front of your computer than in front of the TV. So why not just watch “Lost” on the go? In fact, why not, as some cash-strapped consumers are doing, cut the cable and use web-based content delivery altogether? A frightening thought for cable operators everywhere!

As Hulu is doing, we may be seeing a shift to charging for what was once free, even if it is in baby steps. For now, it seems that Hulu (the second most popular source of streamed internet content behind YouTube) is still going to provide the latest five episodes of offered shows for free, but start charging $10 per month to access older versions. But this sets an uneasy precedent: Maybe you’ll only be able to watch the least popular shows for free in the future and have to pay to access popular programs. In addition, as cable MSO’s battle with online content delivery, maybe they’ll start restricting access to certain competitive URLs if you are a multi-service subscriber? The FCC is currently gearing up for just such a battle on so-called Net Neutrality.

So what does this have to do with TVs? Internet-connected TVs offer an alternative delivery method for just such content, although Hulu has been fiercely protective of allowing its services to be accessed outside of the PC. But content owners could just as easily offer their catch-up services through internet-connected sets that carry advertising revenue potential. These too could start out innocently as free-services for a while, until consumers get used to using them, then switch to a pay service. So much has yet to be decided in this new frontier.

Of course, now that this video content will be coming to us from a variety of different sources, navigating and finding your shows in a seamless manner takes on a new urgency.

We will be discussing this, along with 3D and LED in TVs, at our upcoming SID DisplaySearch Business Conference during SID Display Week in Seattle on May 24.