Ustrategy

Internet with Borders: Hulu, ABC, FOX Streaming Only In The US

After a week in Paris for LeWeb, I'm now in Israel. In between business meetings, teaching a class, and spending time with family, I needed a bit of a break. These days, I'm a bit addicted to Fringe but can also get easily entertained by Eli Stone or Ugly Betty.  With internet connection in full force, I pulled my bookmarked Fox's website and clicked on the Fringe full episode. But instead of the usual loading screen, I got this:

 

That's strange. But no matter. On we go to Hulu. I seriously dislike Hulu's interface and user experience--it's one of the worst site designs I've seen (just look at the zigzagged left to right episode order)--but as long as my show's here, I'm pretty chill. But alas. Hulu too cannot allow people outside the US to view its shows and it says so (a bit more nicely than FOX) here:

Hulu provides a link to more information. This leads to a Q&A that says this:

I checked ABC too--neither networks allow streaming outside the US. According to Hulu's information it's due to regulations and licensing.

I'm not sure how these things work but I find it utterly ludicrous. Don't you?
I mean, isn't the internet open to all--at least in the modern world? And isn't streaming TV free? Sweeping regional restrictions are usually due to government involvement--such as in China...but the US?!?

So bottom line is that is has to do with monetization and scale.  If you cannot be a potential buyer, TV is not free for you. Sorry. It just costs too much to stream and it's complicated enough working with product companies and ad agencies in the US, not to mention across geographies.

But there are also missed opportunities, First, US residents who travel and want access to US TV: small niche but most likely with big spending power--completely shut out. Second,  brand awareness and establishment in growing demographics can have great returns--just take Asia's fast-growing urban areas and the rich middle class: People pay significant premiums to enjoy Western brands. In Europe, people use their smartphones and internet for much more than we do in the US.

Moreover, when extending outside the US, the networks can exercise their leverage and grow their revenue model in creative ways--just think how much more Americans spend on a Starbucks coffee in Vienna or how coveted Japan's Burberry Blue Lable has become around the world.

I'm wondering if by the next trip I take the networks and Hulu will figure out a way. I wouldn't mind paying a few bucks for access when abroad (since I don't drink Starbucks anywhere). Or maybe I'll just spend my money on a Sling box. Better yet--perhaps by next year a couple of girls just out of high-school will figure out a way to provide an automated way for ad publishers to take advantage of the streaming TV audience wherever they are.

Jason Kilar, CEO, Hulu- Media Is An Impulse Business--Live from NewTeeVee Live08

Jason Kilar speaks modestly about Hulu’s growth and its dedication to creating a “brain-spray” of experience for its users, advertisers, and content providers. Hulu was named #1 product for 2008 by PC World Magazine; Time magazine recently wrote it is among the top 5 inventions to watch (it’s the fourth).

There are 12.6 billion number of video streams in the US according to ComScore, opens Kilar.  A lot of users are responding to video on the internet: both user generated and premium, both long form and shot form. Hulu was founded to take a look at that environment and innovate on behalf of users.  Kilar compares the Hulu model to Starbuck’s. Starbucks understood the coffee business is an impulse business. If you can make it ubiquitous, says Kilar, you make it easy to consume.  If you make it easy to consume, people will consume more of it.

Hulu’s mission statement is “to help people find and enjoy the world’s premium content when where and how they want to.”  Hulu’s Rallying Cry:  We want to deliver content, a service, that users, advertisers, and content owners unabashedly love. “We’re just about that,” says Kilar,  “and about delivering brain-spray awesome quality.”

Kilar speaks of Hulu as an obsession. It’s about obsessing (over the user experience) just like Disney obsesses about the experience in its theme parks.  “We argue about the font size and the placement of logo.”

When the topic gets to advertising, Kilar makes Hulu seem extremely appealing. From what I gather, Hulu is experimenting with various advertising models including 30 second spots, presenting users with ad options to choose from and rate a la Dig style (did you like that ad?). I ask Jason what users really say: Does a user start with--yes, please give me more ads? Do people really want to watch something other than the content they chose?  Jason says Hulu constantly speaks to users—and users generally understand that there’s a tradeoff for watching content for free. The baseline Hulu  is speaking to, is the TV model where users pay for TV and are forced to watch 4-10 minutes of commercials. Compared to that model, Hulu provides a much better experience—some might say it seems “more free.”

Online media streaming providers need to pay for their business somehow. But their success is going to depend on how they engage with their users.  As more content moves online (and across platforms), companies will have to create and adhere to contracts with their users.  Length of ad, placement, relevance, and quality are all going to play an important role. Conversation, engagement, and creativity will become a differentiating factor.