November 24th, 2009
Will Hulu Go the Exclusive Route?
‘May you live in interesting times’ is the Chinese proverb and we most certainly do.
There is of course the less obtuse but equally vague – all things come in threes – which when trying to patch together what is happening in the TV/Video landscape is, at the very least simpler to draft off of. The three events that seem to be creating a very interesting lead-up into the year-end are the announcement by Oprah she’s leaving her show, the very nearly sewn up deal between Comcast and NBC-U (save for those pesky French) and Rupert’s saber-rattling with respect to pulling content from Google.
Oprah’s bowing out coupled with NBC’s barely hanging on as something called a ‘network’ has led to a chorus of articles ‘Broadcast TV is Dead’. And while it’s not quite dead this awesome and insane graph of the decline in viewership highlights that there is a very serious issue with the numbers that watch TV and the dollars that advertisers are willing to pay to get in front of those numbers. (Graphic at the end of this post.)
It’s not that Broadcast is actually dying, it is that the model is broken. To wit, between 15 and 20 years ago ten hit TV shows made enough money for everybody – studio, star, producer, network – that everything else was obviated. And by everything else all the other horrifically bad programs were allowed to exist because these monster hits covered up for them when the accounting was done. Those days are long gone at this point and while there are bright spots, from Leslie Moonves’ touting of NCIS – ‘Mr. Moonves noted that the two NCIS editions taken together “are a billion-dollar property”‘ in the same Times article the economics of creating a ‘Lost’ or even ‘Southland’ upfront, the 10s of millions of dollars to do that, and then sell your decreased audience to advertisers – it’s just not really happening.
Now, how does this relate to Hulu? At this stage in the game Hulu is looking more and more like TV. Even today there is a study out that highlights how much Hulu viewing mirrors TV viewing – as goes the Fall Season so goes Hulu. But here also the economics are shoddy. There are less ads per show on Hulu, and even if people watch the show on their laptop – it is still a smaller audience so advertisers are paying less money, less money leads to less production dollars. There is a massive gap between cost of creating the goods (TV) and paying for them (advertising). Add to this that, as mentioned earlier, Comcast is now in the mix with their acquisition of NBC, a Comcast that has its own very capable viewing portal called Fancast, and you begin to see that Hulu is starting to get boxed in by their own success.
As Quincy Smith, the former head of CBS Digital said at New Tee Vee – he loves the service, just doesn’t love the model. Well, I’m no economist and I don’t play one on TV, but I do believe there is a golden opportunity for Hulu to show they offer value above and beyond being a nice viewer for broadcast content and engage with the production and advertising community to create original content that appears on Hulu first. Why? Because there is a middle ground which would allow for production values that people would respect, and by not waiting for their parent companies to expire, Hulu can show added value by offering something they have yet to do. Quality original long-form programming that is native to online and is more than a simple branded entertainment play ” to sell more salad dressing or make-up.
This entry was posted on Tuesday, November 24th, 2009 at 5:04 pm and is filed under Advertising, Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.