Hulu Fast Becoming a Key Part of a New Industry Architecture

Idea Couture and MIT
by Idris Mootee

Here are pictures of the Idea Couture team running several days of long sessions at the MIT. Jeff, Partick, Adam and Cheesan were happy with the progress to date and I am so looking forward to see the first milestone. It is just a great project and a great client/partner. Everyone is excited.

While we are on MIT, I came across some early research from MIT Media Lab on “Emotionally Reactive Television”, it is a very interesting concept. The idea was from the time TV was created, watching TV is considered as a static activity. TV audiences have very limited choices to interact with TV, such as turning on/off, increasing/decreasing volume, and traversing among different channels. The working thesis is that TV program should have social responses to people, such as affording and accepting audience’s emotional feeling with the growth of technologies. This paper presents HiTV, an Emotionally-Reactive TV system using a digitally augmented soft ball as affect-input interfaces that can amplify TV program’s video/audio signals. HiTV transforms the original video and audio into effects that intrigue and fulfill people’s emotional expectation. This is a super cool idea.

MIT Media Lab and HiTV
Some people think media should all be free. Just imagine a world where every form of media as we know is accessible for free. Is this the future? We’re reaching an industry breakpoint in the world of media, fight between pirates, broadcasters, entertainment labels, demanding consumers heats up, the stakes will get higher, and higher.

The convergence of PC and TV will accelerate. I’ve participated in debates and forums around the three screen convergence scenario in the telec industry. That means one provider who can deliver a converged/integrated video/entertainment experience to the TV, PC, and mobile device. This is the telcos’ dream. The idea is, you’re watching something on your TV and you have to leave, you can continue to watch it on the go or so you pause it. Is this something we all wanted?

Hulu advertising revenue
Analyst Laura Martin (Soleil Securities) crafted a worst case scenario for broadcast media. Martin believes Hulu will wipe out the network television business as we know it. In a recent report, she estimates that the online video hub will cost TV networks $920 per viewer in advertising if their audiences are cannibalized by Hulu. She believes the bulk of viewing on Hulu is indeed taking eyeballs from TV. It definitely makes some sense but there are still many wild cards.

Earlier In May she warned that the entire $300 billion market valuation of the television industry is threatened by the shift of programming from TV to the Web. Spearheading the overthrow of TV-as-we-know-it is Hulu, the premium video site backed by NBC Universal, News Corp. and Walt Disney that offers content from the 120 partners. Martin is very confident that Hulu will succeed in the long term. With more than 38 million monthly viewers who watched 457 million streamed videos, it is 6th-most-visited video site, ahead of competitors like AOL, CBS Interactive and the Turner Network, according to comScore.

Hule Value Creation
Hulu is seeding the value migration for its TV network creators as more content that becomes available on Hulu, the more likely it is that consumers will cut the cable cord altogether. Together with that trend is the less attractive economics of online video to advertisers, which offers higher CPMs but fewer ads. The industry estimates that Hulu runs four ads each hour at a $50 CPM compared to 32 ads during each hour of programming on TV at a $35 CPM. ($1,120-$200 = $920). Hulu did not disclosed actual ad sales or ad rates.

TV Everywhere
The TV everywhere idea is not new. Except it is getting real. I am not sure if it is so simple. There is a lot of uncertainty about the speed of deployment of new technologies and services, and of their adoption driven innovative user experience design. Hence the implications for spectrum demand and management of all these changes are far from clear; and convergence raises the fundamental question of whether current service definitions will make any sense by the end of next year.

Idris MooteeIdris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

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No Comments

  1. Ramki on July 2, 2010 at 9:02 am

    I think We are increasingly getting to ‘Content-centric’ and media-indepdendent paradigm . Tv channels demand the availability of people on certain times , while web is an on demand , non-community based viewing experience, with multitude of choices. ALso web gives a possibility of collabarative viewing experience( eg. youtube + chat) , which is possible in TV with help of SMS ( i.e watch TV and communicate thru SMS )

    This way , world still moves to web with our culture getting less community, family based with ‘increased’ ‘short’ attention spans, while retaining those stuff which demands TV experience ( eg . HDTV with big TVs, Live shows which is better viewed in TV , reality shows ) to the old idiot box !!

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