Somehow the two powerful brands NBC and Fox merging to create a new online music and user generated content site, gave the impression of a monstrously powerful new band. But when we heard it would be called Hulu, much of the threat seems to have gone out of it.
We have already signed up for a private beta, and we’ll let you know if we get one, which will run through October. But regardless of the branding this sounds to us something of a hybrid, a cross between YouTube and iTunes, and we wonder if by that token it will fall between two stools.
Actually make that three stools, because there are references on the site of discussion boards, chat rooms, and blogs to go with the strict rules about UGC posting policy.
The clue that this is a replacement for iTunes is that all of the content hinted at by the DVD cover art on the site now is the exact same content that Apple is losing by the non-continuation of its content deal, announced this week by NBC.
NBC Universal put out a release this week saying that it was disappointed that it could not reach terms with Apple over the renewal of its filmed content for the iTunes site, whereby Universal wanted to offer two shows together in bundles, for double the price, while Apple wanted to carry on as it was. Apple has resisted interference from record labels and studios alike over differential pricing on iTunes, in order to make the service clear for the iTunes consumer.
Apple will lose TV series like The Office, Heroes, and Battlestar Galactica and NBC Universal will look to replace those sales on its own site and on the new Hulu site, which will offer advertising supported free to view content. NBC will also continue to supply the content to other services like Amazon.
Hulu will also have access to Fox programming including 24, The Simpsons and House. There is no hint that Fox will also pull its content off iTunes, but a successful Hulu might help it reach that conclusion eventually.
The deal with NBC Universal and iTunes doesn’t run out until the early part of December, and there is every chance that this is a bluff. If NBC Universal is really committed to making an online business, it would have had no need cut off Apple. If its free ad driven experience at Hulu turns out to be attractive, all of the iTunes customers would have flocked to Hulu and stopped paying for their content, with no cancellation. It seems to us that this is a case of trying to find out who runs the relationship and again an orchestrated strike at the power of iTunes, timed to arrive at a time when everyone else ‘ Verizon, Nokia, Sony – (see other items this week) are also striking back at iTunes.
The NBC statement said that Apple’s retail pricing strategy is only designed to drive sales of Apple devices, and said this was at the expense of content companies. And in the same breath it decides to give the same content away.
NBC then also said something quite breathtakingly stupid. It suggested that Apple needs further steps to improve content security. It makes this statement based entirely on the fact that the typical iPod contains a significant amount of illegally downloaded material. This material is universally either ripped from unprotected CDs or from file sharing sites and then placed on the iPod. The lack of protection is in the systems that the record labels and studios offer, and not on the iTunes system, which at least has renewable, if not rock solid, DRM.
The method and software for breaking into a DVD is plastered all over the web, and most of the pirated content on an iPod is music from the existing person’s record collection, not video.
Getting back to the NBC Fox site Hulu, the idea seems to be to create both an uploaded clip heaven, like YouTube, with many professional and some UGC video, but at the same time provide full content like a film streaming site with advertising support.
This is a cute move by Fox and NBC because they are both US national broadcasting networks, under pressure to accept that their falling audiences will eventually lead to a collapse of advertising revenues associated solely with broadcast TV. They are looking to replace that lost revenue with a big hit video site and cross sell advertising, some delivered as viewers on the broadcast shows and some delivered in web hits.
It is also a direct strike against the new genre of advertising based TV programming that is led by sites such as Joost and Babelgum.
The question remains why would web users who are deserting broadcast TV for their own design of entertainment, simply go to a site that will impose strict copyright rules, and offer the same content that these people are leaving behind on TV. If they don’t watch this content on a broadcast or a DVR, why would they watch it on a PC? And if they did want to watch it on a PC, are they more likely to go to a site that has been designed with them in mind, rather than to one built by an organization which is unhappy with the YouTubes of this world, which these people love.
The likely outcome is that Hulu will not make it to the end of 2008, because TV network executives are too busy trying to win the market share war on TV to learn how to appeal in the entirely new experience of web entertainment.