Friday, October 30, 2009

Hulu Charging For Shows? Oh noes!

There are rumblings that awesome TV show site hulu.com may have to start charging for TV shows. This has resulted in the predictable Nerdhate and rage.

But come on. I'm no happier about this that you. But. Of course they will do this, and it's hardly a terrible idea, for two reasons:

Advertising Is Not An Infinite Pool of Money From Which We Can Drink Without Limit - If the net should have taught us anything over the last few decade, it's that, "Hey, let's give things away for free and make money from adventising" only works if you're Google. Hulu is an awesome, awesome deal. It's just too beautiful to live.

People Pay For TV Shows! - Look at iTunes. People will happily give a buck for a TV show they like if it's really easy and convenient. To say that nobody will pay hulu is ludicrous. Some people will turn back to torrents. People like me, whose time has value, will just pay the dollar.

People hate to hear this, but it's true. Making TV shows is difficult and expensive. If ads don't make enough money (and I really doubt that the handful of ads hulu shows pay the bills), they will have no choice but to start charging. It's just the math of the thing.

16 comments:

  1. This is different from software piracy. People have been trained for 60 years that television is paid for with advertising. If I'm gonna pay for TV it's not gonna be little computer TV it's gonna be cable.

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  2. I guess they could try increasing levels of advertising, like making you look through a page of ads before watching the TV show. But I've always kind of felt that was a low move, so I guess charging directly is probably better. Not that I watch Hulu, ever.

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  3. Look at iTunes. People will happily give a buck for a TV show they like if it's really easy and convenient.

    It remains to be seen if they can hit the right price points and business model. I fail to believe that these TV execs get it.

    If they go subscription, they will lose to Netflix. They have not been as aggressive as Netflix on going multiplatform (still no official Hulu for X-Box). Their back library is just not as good. The primary advantage of Hulu is catching up on current series for which you missed an episode (or 3). They would have to make a lot of investment in this space to win; the start-up costs are high.

    The other alternative is pay per view. This makes some sense because, as I said, Hulu is great for catching up on current series. But if you run the numbers, it might be better for these series to be loss leaders, where you get the viewer back on track to watch it on TV. Hence you take losses now, to get gains later. Plus, with the video quality, it would really have to be a microtransaction model to be worthwhile.

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  4. I would have no problem paying a small fee for hulu if a) the back catalog coverage was better and b) the current season coverage extended to the whole season.

    Hulu in its current configuration? Nope, I won't be a customer, because there's not currently enough value there for me to pay for it. If they add enough value then yeah, I might do that. Probably not as a PPV, but a subscription model would be fine.

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  5. I do not have cable, satellite or any other conventional source. All my TV comes from NetFlix, hulu and Apple TV. The only way new hulu will remain on my list of sources if it's cheaper then iTunes.

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  6. @Skip: "I would have no problem paying a small fee for hulu if a) the back catalog coverage was better and b) the current season coverage extended to the whole season."

    Yeah, I can totally buy this. And I believe that if viewings of tv shows on hulu led to cold hard cash, the big boys would be clamoring to get their shows onto it. Now that the money from TV series on DVD is slowing down, it's a new cash flow source.

    The only reason (well, a big reason) they're so tight-fisted about having shows on hulu is that it's free

    - Jeff Vogel

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  7. @Vrungel: "The only way new hulu will remain on my list of sources if it's cheaper then iTunes."

    And, considering the quality, it SHOULD be cheaper than itunes. I wonder if they will actually be smart about it.

    - Jeff Vogel

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  8. @Jeff Vogel: "I wonder if they will actually be smart about it."

    They will not be smart about it. History tells us so. Good for Apple. Good for Netflix. They DO get it.

    @Jeff Vogel: "People like me, whose time has value, will just pay the dollar."

    My time has value but a free download is just delayed gratification. It costs me no time. It's a background application. I feel no need to justify the download of something that I could have recorded on my DVR.

    Excuse me while I go watch the Wire DVD that I rented from Netflix. That is worthy of payment.

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  9. iTunes' show prices don't seem too bad to me now that I have a job, but as a college student, they were prohibitively expensive. I know I wasn't alone on that. Hulu made much more sense all around, even on the filesharing front (bandwidth restrictions + sharp netops guys made that a dubious proposition even without considering legality).

    I hate to say it, but I feel they could get a lot more out of their advertising than they currently do. Whenever I do watch something, the ads are repetitive and irrelevant - the third time through the same 20-second spot does not make me want to buy your car insurance any more than the first two did! If they had users create accounts and specify their areas of interest, I think they could get much more targeted ad views. Even putting out different ads based on observed viewing habits (watches Firefly -> probably a bit geeky) could give them an edge. There's so many things they could do that TV can't - they're not restricted to static content, advertising or otherwise - but the site was a TV network initiative to begin with, and I think it's going to be a while before they start looking past TV-esque models.

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  10. I do think that TV shows (and movies too) could cut back on expenses... some might even start with actors' salaries. I know some actors do put a TON of effort into their roles and there are a select few that people will watch just for them (and that have value)...but when they get paid a million bucks per episode I wonder why they couldn't settle for half or even less. [ same goes for movies where people get paid $30 mill. ... could they do it for $15mill? how about $7 mill.?

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  11. I don't know. TV has such wide-reach, it seems like they could pay for it with advertizing. Afterall, that's how they've been paying for it for decades. A couple cents per viewer times X million viewers is a lot of money.

    Last year, there was an article about the Simpsons voice-talent negotiating $400,000 per episode (that's per-person). That's based off of Ad revenue. I mean, I know that they had a lot of viewers, but wow.

    I don't know why Hulu would be much different than ad-based TV, unless bandwidth costs are eating up a good chunk of their Ad-revenue. My only guess for why they would switch to a pay-model is that they figure they can make more money. (Oh, and I had read recently that Hulu isn't switching to a pay-model for most of their shows. It would only do that in special cases.)

    > "I do think that TV shows (and movies too) could cut back on expenses... some might even start with actor's salaries..."

    If they could cut back on actor's salaries, they would. The producers know that every dollar they don't pay to actors is an extra dollar they get to keep. The "problem" is that when a TV show or a movie makes a lot of money, and an actor brings something to the movie that increases sales (say, by 20%), then that actor is in a really good position to negotiate a big chunk of the money - otherwise they'll walk. I mean, we could say the same thing about sports - we want lower prices on sports tickets, and we can start with cutting athlete's pay. But, given the market, why would any creator who can earn $2 million per basketball game voluntarily decide to cut ticket prices and ask athletes to take a pay-cut? Because it's what we want them to do? People aren't going to do "what we want them to do" simply because we want it. It's all about the market and how badly people want things. Heck, they might want us to pay $10 for each hour of TV that we watch, but we'd all walk. We aren't going to do what they want us to do anymore than they're going to do what we want them to do.

    You might call them greedy for getting as much as they can from us, but they could call us greedy when we want our TV for free / based on advertisements. It all depends on which side the fence you're on.

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  12. I see no downside to charging for television shows. It will to some extent drive them away from television and perhaps on to wonderful shareware games such as Avernum, Geneforge, etc. :) Besides, everything is charged for, why not TV? Music yes, but TV no? TV is vastly more expensive to make than music. I really see no downside.

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