23 April 2010
First off, I want to say that I’ll probably be one of the first to sign up for a $10 Hulu subscription when it’s available. That said, I have a sneaking suspicion that the service won’t be that long-lived. And the reason is closely linked to many, many big startups over the past 10 years.
After seeing some videos from the Startup Lessons Learned conference today (and spending the last 5 years of my life at startups), I’m struggling a bit with the idea of companies that launch with a “go get lots of users, we’ll monetize them later” mentality.
For every Google, there are a hundred MySpaces that get huge with no business model, then don’t stand up in the harsh light of a quarterly report. Hulu, Twitter, and Facebook are all in that perilous transition period where user base isn’t good enough anymore.
Hulu is especially interesting to me, because it represents about 90% of the content that’s piped into my house. Almost a year ago, I shut off our satellite service in favor of streaming over the Web. We have a Mac Mini hooked to our TV, and most of our media consumption is through Hulu Desktop.
I’m convinced Hulu Desktop is the most forward-thinking app in the current crop of media players. It’s more vital than Boxee, VLC, Plex, or even iTunes. These are solutions that are primarily geared toward people who amass and store media locally, while Hulu recognizes that I don’t care to store a huge amount of content… I just want to watch it.
So it’s like the worlds biggest TiVo, and it went ahead and recorded everything on TV for me, with a fantastic interface for browsing the content.
The most important thing Hulu Desktop does is exactly what convinced my wife to watch TV on a computer: you turn it on, and it starts playing. This concept is so much a part of the fabric of set-top devices over the last 30 years that I’m shocked it eludes modern software. Every modern set-top media box seems to want to dump you into a heirarchal menu, requiring you to make a series of complex choices before you can watch TV… even the Apple TV (though I hear that’s due to change soon).
Let me repeat: the most important thing you can do when showing media on TV for the mass market (I.e. “non-techies”) is to just start playing something when the device is turned on. When a show ends, it shows me the next episode, or something similar. It plays the NBC Thursday night comedies in order, and it follows up Stewart with Colbert (at least, it used to). The people behind Hulu get it.
On top of that, they’re handling the subscription model very well… If it adds enough features. A free service suddenly switching to a pay model is usually a kiss of death, but the addition of premium services is the backbone of the “freemium” model that has a fighting chance of success.
Now the bad news: I think Hulu is doomed.
Hulu’s eventual downfall will be due to a slow degradation of service, at the hands of greedy and fearful media conglomerates. And it’s already begun: though the show’s creators wanted all episodes online, “It’s Always Sunny in Philadelphia” yanked all but the last 5 episodes in Hulu’s first PR blunder a couple of years back.
More recently, Viacom yanked Jon Stewart and Colbert altogether. All this taught me is that I can live without them. Nice work, Viacom!
So is a $10/month subscription model likely to stem the tide of this gradual degradation? Not likely. Media giants like Rupert Murdoch have already proven to be so short-sighted and afraid of change that I think Hulu will constantly have to fight for its life against the media companies that created it. And it will lose.
I worked for a startup that had a great product that had thousands of loyal customers. But the product could never live up to the billion-dollar expectations that fueled massive overspending in building it. From that point on, the product could never be financially viable: the cost to build it was ten times what the market would bear.
I think Hulu is doomed in a similar way. It’s the media companies trying to collect pennies where they are accustomed to demanding briefcases of money. Yes, these pennies are better than nothing, but no, it’s not going to provide the budget to create another Lost. Hulu, while a great service overall, is based on a fundamental misunderstanding about the direction of media on the internet: that the money they used to make from TV content through mass advertising will magically come from the interwebs.
Big Old Media is both what makes Hulu so compelling (big-budget content on the web!) and the millstone around its neck (big-budget content… on the web?!?).
Still, I look forward to seeing the features that $10 buys me, until the media companies ruin it. I’d love access to a larger back catalog of episodes, so I can catch up on Fringe. Maybe it’ll even bring back Colbert. But not for too long, I’d wager.
UPDATE: While editing this post, I saw that NBC’s Thursday night lineup is not on Hulu yet, as it has been on every Friday night for the last year. The rules of Hulu are constantly shifting, and always out of favor of the user. I’ll be sad if I have to fire Hulu as my primary media source before they even have a chance to launch the subscription service.
In short, you can’t make your service suck just a little more each week and expect people to flock in instead of out.
Despite all this, am I the only one who’s still signing up?