Connected TV Quagmire - How Will Hulu Head for the Future?

written by: Richard Kastelein

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In a revealing article in the Wall Street Journal today by Sam Schechner and Jessica E. Vascellaro, titled Hulu Reworks Its Script as Digital Change Hits TV, it appears there is some conflict in the upper echelons of power in both the mother companies (NBC Universal, News Corp. and Walt Disney) and Hulu itself on how to move forward in the emerging Connected TV landscape.

"Worried that free Web versions of their biggest TV shows are eating into their traditional business, the owners disagree among themselves, and with Hulu management, on how much of their content should be free.

Fox Broadcasting owner News Corp. and ABC owner Disney are contemplating pulling some free content from Hulu, say people familiar with the matter. The media companies are also moving to sell more programs to Hulu competitors that deliver television over the Internet, including Netflix Inc., Microsoft Corp. and Apple Inc.

And in what would be a major shift in direction, Hulu management has discussed recasting Hulu as an online cable operator that would use the Web to send live TV channels and video-on-demand content to subscribers, say people familiar with the talks. The new service, which is still under discussion, would mimic the bundles of channels now sold by cable and satellite operators, the people said."

Disruption is pretty evident - and it appears that some are not sleeping too well at night - such as the very broadcasters behind Hulu, cable TV operators, and even CE manufacturers such as Sony, Samsung, LG, Vizio, Sharp, Philips, Panasonic, Toshiba and more as well as Google, Apple, Yahoo and other players - are all scrambling to figure out their role in the new Internet television universe.

Essentially what it all boils down to is - there are new, direct, open paths to reach consumers via IP protocol and emerging TV devices that are tapping into the internet for content - broadcasters, pay TV operators, cable companies, satellite TV companies and content creators have already made a play to get content on the web - at reduced rates and low ad revenue expectation - without having to threaten their lucrative cable, free to air, satellite and other delivery system monetization structures. But with the web opening up to the big screen in the living room via IP Connected TVs - suddenly the need for pay TV models and commercially interupted TV becomes less desirable for consumers. Not to mention the concept of watch.... what you want to watch, when you want to watch it, on any device, anywhere - also known as TV Everywhere is potentially disruptive to their current business models.

More from the WSJ:

After upending the music and publishing industries, the digital revolution is poised to shake up TV in earnest this year. As more viewers watch TV and movies on the Internet, 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.

..."It remains unclear what the business model is" for Hulu, said Bruce Rosenblum, head of the television arm of Time Warner Inc.'s Warner Bros. studio. "At some point, if enough people turn off cable, then you've got a complete disruption of the business model," he said.

Hat tip to Jason Mitchell for the lead via Linkedin


About the Author

Richard Kastelein
Founder of The Hackfest, publisher of TV App Market and global expert on Media & TV innovation, Kastelein is an award winning publisher and futurist. He has guest lectured at MIT Media Lab, University of Cologne, sat on media convergence panel at 2nd EU Digital Assembly in Brussels, and worked with broadcasters such as the BBC, NPO, RTL (DE and NL), Eurosport, NBCU, C4, ITV, Seven Network and others on media convergence strategy - Social TV, OTT, DLNA and 2nd Screen etc.

He is a Fellow of the UK Royal Society of Arts (RSA) and UK Royal Television Society (RTS) member.

Kastelein has spoken (& speaking) on the future of media & TV in Amsterdam, Belfast, Berlin, Brussels, Brighton, Copenhagen, Cannes, Cologne, Curacao, Frankfurt, Hollywood, Hilversum, Geneva, Groningen (TEDx), Kuala Lumpur, London, Las Vegas, Leipzig, Madrid, Melbourne, NYC, Rio, Sheffield, San Francisco, San Jose, Sydney, Tallinn, Vienna, Zurich...

He's been on advisory boards of TEDx Istanbul, SMWF UK, Apps World, and judged & AIB awards, Social TV Awards Hollywood, TV Connect & IPTV Awards.

A versatilist & autodidact, his leadership ability, divergent and synthetic thinking skills evolved from sailing the world 24000 miles+ offshore in his 20′s on sailboats under 12m.

He spent 10 years in the Caribbean media & boating industry as a professional sailor before returning to Europe, to Holland.

A Creative Technologist and Canadian (Dutch/Irish/English/Metis) his career began in the Canadian Native Press and is now a columnist for The Association for International Broadcasting and writes for Wired, The Guardian & Virgin. His writings have been translated into Polish, German and French. 

One of Kastelein's TV formats was optioned by Sony Pictures Television in 2012. 

Currently involved in a number of startups including publishing TV App Market online, The Hackfest and Tripsearch TV. As CSO for Worldticketshop he helped build a $100m company.

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