Hulu delights digital giants - and they are right
Jul 22, 2011
Hulu attracts digital giants with its potential to revolutionize content distribution and challenge traditional TV models.
Now, things are really going to heat up. The news of the likely bid from one of the digital titans, Apple, Yahoo, or Google, for Hulu is a sign that they are definitely going to venture beyond technology and move towards delivering content on a device that competes with television. The current owners of Hulu (NBC, Fox, and Disney) are certainly going to make a good deal of money, but the entry of the digital elite into the segment will have a bombastic effect on discussions of distribution and copyright of content.
The major content generators of the world (studios and producers commissioned by major TV networks) still fear "piracy," believing in a fallacy that is similar to imagining that the world revolves around the sun. What happens today is that content circulates without payment because it is very expensive - much more expensive than it should be. Distribution systems like Hulu are the obvious future (without any attempt at a pun) because they are the last chance for mega-companies to sell their content, under control, to a large enough customer base that convinces them to demand acceptable payments within the digital economy.
According to the Financial Times, the value of the business will be defined by the exclusive rights contracts that Hulu has. The longer they are, the higher the market value of the site. Hulu's CEO had already criticized traditional TV networks saying they had too many commercials. The provocation has to do with the issue of the dinosaur business models of traditional media: TVs do not have too many commercials because they want to, but because they are like old V8 Mustangs whose engine furiously drinks gasoline to sustain so much power. Hulu proposes a business model that is a slap in the face of TVs, but the problem is that these TVs (and many studios that also belong to common owners) are the ones that generate the bulk of the content that Hulu has to sell. Hence, the importance of the duration of the contracts.
What the digital giants must have already realized is that Hulu is a good chance to get into social networks through the provision of a shared, adjustable, and suitable service for the user who never disconnects. As added value, it is even more valuable to companies that are not at the forefront of social networking exploitation (like Yahoo, for example) or for those trying to set up their own tent (like Google with G+).
The generation of content as we know it today is formatted on the business model of TV and tends to change radically in the medium term, just as talent was drained from movie studios to television drama (you hadn't noticed that it's much more common for a great series like House to appear than a decent movie from the American majors) because TV revenues were safer and cost much less than making a feature film. Today, Hollywood lives off one or two interesting films, leaving its overwhelming majority to action films full of special effects and no brainer scripts, while series like House, Dexter, True Blood, and Mad Men are clearly smarter.
Hulu has everything to be the digital equivalent to the hypodermic needle of the mass media communication theory models that emerged in the mid-20th century, but without the ideological malevolence that those models predicted. It will be able to keep the user of digital communities even more entertained, paying little and interacting with the content. The fact that Apple, Google, and Yahoo are paying attention to this is a sign of this trend. If someone wants to end piracy, attack there. And, for good measure, still make heaps of money.