Archive for the ‘TV’ Category

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The Coming Video War Between Apple and Google

21 Dec
2011

by Ben Elowitz

This follows my recent post about how a new TV interface from Apple could decimate the television landscape.

Even though Steve Jobs never talked about changing the face of search with Siri, its natural language interface.

But doing so would certainly be a riveting Hollywood screenplay in which Jobs, the uber-innovative, uber-inventive CEO, ultimately gets revenge on a corporate rival he views as a “copy cat.”

In this fictional script, that rival would be Eric Schmidt, one of the top executives at search giant Google. It’s Google, after all, that’s breathing down Apple’s neck with its rapidly expanding Android phone platform – a platform that, according to Jobs and his lawyers, mimics Apple’s breakthrough iPhone technology.

Putting this Oscar dream aside, there’s intensifying competition heating up between Apple and Google, even though Jobs is –sadly – no longer on the scene.

Indeed, even though Google has had voice-enabled search for some time on iOS and Android devices, Schmidt has said it’s possible that Siri could be a real and radical game-changer.

Schmidt may be right.  And if he is, then Google will be facing a serious threat as Apple reinvents Google’s home turf of search.

With a “personality” that displays a unique understanding of humanity, Siri’s digital chromosomes enrich the user’s experience. This sets it apart from Google’s more mechanical offerings, and shows why Apple’s consumer-obsessed culture is so different from Google’s corporate DNA, which is as robotic and algorithmic as the “Android” name suggests.

There is rich irony here, as Apple disintermediates the greatest disintermediator of all time.  When Google’s superior search service started, it practically single-handedly reduced the brand-driven experience that consumers had thereto relied on with directories and a fully editorialized Web.  Google replaced those channels and home pages with 10 blue links.  And in the process, became users’ destination of first resort 13 times per day.

And Apple has always been a curator extraordinaire – developing collections and exercising famous (and occasionally notorious) judgment to determine who deserves to be in its directories of songs and apps.

But now, Siri stands ready to flatten the world of entertainment.

In all fairness, Page and his team are now trying hard to enrich the user experience by aligning their YouTube brand with media companies like Disney, and doling out big dollars for proprietary programming. The hope here is that YouTube can create dozens of lucrative user-friendly / user-favorite Web channels featuring comedians, sports stars, musicians and other entertainers.  The company is building stocks of its ‘own’ media weapons in preparation for the coming war.

But, as always, it will be hard for Google to win the hearts of consumers when it comes to content; and it will be especially daunting because Apple is already so completely connected to users.

Meanwhile, with its enviable consumer connection, Apple will undoubtedly extract a toll from media companies, who still want to bathe in the warm digital light that emanates from the inviting and engaging brand Jobs built.  And, as it has in every other media category, Apple stands to capture an outsize share of profits for delivering content into a magical consumer experience.

Jealous much, Google?

With Siri TV, Apple Will Dismantle the TV Networks

16 Dec
2011

by Ben Elowitz

This article was published as a guest post at All Things D, and is republished here for DigitalQuarters readers.

Steve Jobs died without fully transforming television, but the day after he passed away, Apple unveiled Siri, its natural language interface. Though it’s currently only embedded in the new iPhone 4S, Siri could eventually change the face of the TV industry.

Notice I said “TV industry.”

But from my perspective, Siri’s greatest impact won’t ultimately be on users, or on device manufacturers (though they certainly risk losing market share to Apple). It will be on the TV industry’s content creators and packagers. Why? Because a voice-controlled television interface will fundamentally disrupt the six-decade-old legacy structure of networks, channels and programs. And that’s a legacy that — until now, at least — has been carried forward from analog to digital.Most observers and analysts believe that Siri’s voice commands could eliminate the need for those clunky TV remote controls. With the blurring and exponential proliferation of television and Web content, telling your TV what you’d like to watch, instead of scrolling through a nearly infinite number of program possibilities, makes a lot more sense.

There’s an important underlying precedent here.

If the Internet can be generalized to have one effect across every industry that moves online, that effect would be disaggregation. Choices go from finite to infinite. Navigation goes from sequential to random access. And audiences choose content by the item far more than by the collection. We’ve gone from the packaged and channelized to the unbound and itemized. Autonomous albums are fragmented into songs; series into clips; and magazines and newspapers into articles and individual photos.

As much as we may think that has already happened with video, it is nothing compared to the great leveling that will occur in the voice-controlled living room. Voice-controlled TV means direct navigation to individual episodes, programs and clips. And it will almost certainly lead to a discernible deconstruction of the network and channel structure — not to mention the decomposition of even the aggregated marketplaces like Netflix, Hulu and YouTube.

Here’s the simple reason: No one is going to sit on their couch and say, “Siri, show me NBC’s ‘Community.’” In a voice-activated world, monikers like “NBC” become useless. They don’t stand for anything meaningful to the consumer. They’re just remnants of a decrepit channel structure that’s unraveling. And, in the end, they’ll simply connote the fast-fading allure of mid-20th century mass appeal.

To be sure, the TV majors will lose much of their ability to realize network effects. Already, you’re hearing less about “lead in” and “lead out.” What you are hearing more about, however, is disconnected videos. A program on YouTube, for instance, will sit on a level voice-controlled playing field with an NBC show, and that field will soon become even more level, because Siri will eliminate the menus that structure the artificial hierarchies of content collections.

So how will we be able to get network effects back in video? Let’s look at four possible ways:

  • Branded Content — Players can build a strong brand that stands for something with their audiences. Break.com, Discovery and Oprah are all meaningful and build long-term customer loyalty. (“Siri, show me new TED Talks.”)
  • Curation — Brand the collection with a curation strategy so that the curator’s name and stamp of approval means something to the audience. (“Siri, show me Jason Hirschhorn’s latest movie suggestions.”)
  • Social — In the fully social world that we expect to see, focusing on the virality of content means you tap the human distribution network and social operating system. (“Siri, show me what videos my friends are watching.”)
  • Personal — We’ve already seen the extraordinary value of well-tuned personalized recommendations, with Netflix’s notable prize and other famed stories of the benefits of great recommendations. Increasingly, our own patterns of individual videos and the brands we affiliate with, along with recommendations from friends, will be combined into personalized recommendations we won’t even have to ask for. I have no doubt that Siri will be as good a “Genius” as iTunes is at recommending what else to watch. Ultimately, in the age of data, whoever knows the most about us will be able to give us the best experience.

Beyond disaggregation, personalization is ultimately the most powerful consumer value of digital media. My mother’s TV experience was to walk over to her TV set and turn a dial to select among three channels to satisfy her individuality. But in the next generation, no two people will receive the same recommendations from the millions of content choices available.

Before he died, Jobs now famously told Walter Isaacson, his biographer, that he had finally cracked the TV code. It’s unclear what Jobs meant, what this entailed or what he thought it would lead to in the years to come. So, barring further posthumous disclosure, Jobs’s own predictions of his ripple effects will be a media mystery for now.

One thing that’s clear, though, is that Jobs’s Siri will start the dismantling — or creative destruction — of the TV industry as we’ve known it for the last 60 years.

Are You a Media Company or a Technology Company?

2 Sep
2011

by Ben Elowitz

One of the most important questions publishers are grappling with today is whether they oversee a media company or a technology company. In the following article, which appeared originally in my Media Success newsletter and was subsequently republished at AllThingsD, I explain why every media company has to be a technology company. Then I offer several keys to success in the current digital environment, which is dominated by the rise and evolution of the new social Web. Please take a read, and let me know what you think.

Two Truths

Let’s start with two truths.

First, publishers need cutting-edge technology to hook an audience through today’s digital media channels of the Web, mobile, social, and search.

And, second, the breakthrough technology can’t just be about product design – it’s got to go beyond to create distribution advantages on the new connected Web.

One Question

Okay, now that we have the truth out of the way, let me ask you a question:

“Is your company a media company, or a technology company?”

I love getting asked this question.  And every digital media leader I know hates answering it.

Discomfort, Uneasiness, Anxiety, Fear

The uneasiness begins with the mistaken idea that the two are separable.  And they were – back in the 15th century, when Gutenberg first worked his printing magic, and up until a few years ago. But we all know digital technology has inserted itself inextricably into the guts of publishing, replacing ink with bytes and paper with pipes.  And now, over the last two years, technology has transformed the basis of publishers’ relationships with their audience, by connecting them through social operating systems, as we discussed last month.

And yet, our uneasiness escalates to anxiety when we realize we still don’t fully understand the new technology’s potential or impact on our business.

That is a scary thought. 

Technology Drives Media

I think we all need to collectively swallow our fear.  We know every media company must be a technology company today.

In the first generations of digital media, it was easy.  In AOL’s past, technology’s key role was simply to provide basic Internet access over dial-up lines. Today, while that access provides cash flow, it no longer has any strategic value in media.  Similarly, Yahoo’s early technology prowess was applied to create significant products like Yahoo Mail.  But while Mail still drives 73 percent of the audience to Yahoo’s media properties, it won’t secure Yahoo’s future ability to be a great media destination.

These two companies – as well as the rest of us – need to use technology for something more advanced than access and ancillary products. We need to put it right into the heart of media so that we can create breakthrough user experiences and new connections with audiences.

Millions of Ways to Engage

To do that, let’s start by recognizing what’s changed about the medium itself: In analog days, publishers’ products were two-dimensional; and all we had to work with was ink and some paper.  And similarly, distribution was mostly two-dimensional; a subscription list and newsstand sales was all there was to it.

But now, consumers have access to millions of sources at their fingertips, and each one can be rich and interactive, reaching us through several different digital channels.  Both our product experiences and our distribution can be much more intricate – and much more valuable.  And combining the two gives media the chance to do something it’s always aspired to do before, but never been able to.

The Future Will Be Personalized

We have recently become ready for a whole new vision for media.

And that’s giving every audience member the right content in the right place at the right time.

To do this takes a combination of data – from the social operating system – coupled with media’s greatest power, that of creating experiences and distributing them.

To achieve this, though, we need technology to do more than output HTML pages; instead, it has to chaperone customized content to every individual.

This is a big change from the original Internetization of media, which was, like generations of offline media before it: “If you publish it they will come.” That worked when directories like Yahoo and search engines like Google matched consumers to content. But that attitude was passive; and today’s social Web is anything but. So publishers now have the opportunity – and the challenge – of taking charge of their distribution.

The key is using the emerging social Web to get signals from, and connect to, the audience.  And when we do this, we are putting technology in the role of relating uniquely to every consumer in order to create the ultimate experiences they crave.

Now that’s a refreshing concept for media.

Three Ways to Get Ahead

But what does this mean, practically speaking?

I believe the role of technology in media success must embody these three things:

  • Use technology to determine the right content – The social Web offers a wealth of real-time data.  Use it to see what matters to your constituents. Tools like Newsbeat are helpful moment by moment, and article by article. But you have to go further. The great breakthrough of digital media is being able to connect to your audience as individuals, not just in aggregate. No longer do you have to create for a persona or prototypical user; instead, you can create for real users. Media companies need to develop technologies that give them a proprietary edge when it comes to understanding the specific needs of their potential audience; that way, they can serve consumers better. And the opportunities abound. At Wetpaint, my company, for example, we process Twitter, Facebook, Google, and our own site’s data, all in real-time to know what content matters – and to whom.  And yet, we can go much further, to ask and intuit feedback from each user individually. The future is a completely personalized experience from every publisher. It’s not far-fetched; in fact, it mirrors what consumers already patch together with all too much difficulty.
  • Take control of your distribution – Reach consumers with the right content at the right time and place (via Web, mobile, video, social, and search).  Don’t just have your social media team pump the same content from your Web CMS through Facebook and Twitter. Instead, use technology and research to understand the secrets of what works.  Truly engaging your potential audience can improve your results by a factor of two or more.

We’ve already seen this at Wetpaint, and the results are still getting better each week. Our database of everything we publish tracks all the distribution causes and effects, so we know what works. We also pay attention to who the influencers are, with technology that identifies them as well as who their influencers are; and now we’re building a “CRM”-like system to help us know more about these individuals and win them over.

  • Package it into the right experiences – Print is static and flat; but so are too many digital media properties. That’s why I applaud The New York Times for continually looking at how to repackage into mobile apps; and that’s why I like Flipboard, which takes a data-rich, but visually cacophonic, content feed and packages it into an immersive experience.  AOL’s riff of ultimate personalization has impressed me even more:  they’ve recognized that every consumer should get their own Edition – nailing the concept of personalization better than any media approach before. This is the opportunity for each of us now, as we connect with audience members and try to offer them more compelling experiences in return for loyal usage.

Technology Changes Businesses

Let’s circle back to the discussion of whether you’re a media or technology company.

By its very nature, digital publishing is a technical medium. But, beyond that, what makes technology interesting isn’t its ability to carry bits; it’s its ability to change businesses. And we need to change our own by updating our sense of audience, distribution, and experience creation to provide thousands of times more precision than media ever has before.

When we do that, we’re making the content thousands of times more relevant. And I believe that’s how you build a thriving digital media business in the next decade.

 

 

 

 

Sometimes, You Get Lucky and Just Nail It!

7 Apr
2011

by Ben Elowitz

I’m not the Amazing Kreskin, and I hardly consider myself a visionary prophet. I’m just Ben. But I happen to live and breathe the digital publishing business because it’s my professional passion.

So, I was quietly surprised to read this week that Hulu’s subscription video service will surpass one million subscribers in 2011.

This forecast comes from Hulu CEO Jason Kilar, and was reported in the Wall Street Journal; it was also analyzed by Peter Kafka in All Things Digital.

I was taken aback by Jason’s announcement – not because I doubted Hulu, but because I somehow managed to predict the Hulu Plus subscriber number exactly a year ago.

Indeed, a year ago, in April 2010, I said: “I expect that the service will reach or exceed a million subscribers by the end of 2011.” (See my April 23, 2010 prediction here.)

In life, like baseball, sometimes you win; sometimes you lose; and sometimes you’re rained out.

But the W’s always feel best.

Good job, Jason!

And for the record: I continue to be bullish on Hulu. As long as it can keep its content license agreements humming, it will have a killer collection of content, plus killer experience, to offer consumers; it also has killer context to offer advertisers. And that’s a formula for great success.

New Study Shows That Entertainment Goes Beyond Content

20 May
2010

by Ben Elowitz

Social Networking as Entertainment

For most of us, particularly in the media business, the word “entertainment,” is synonymous with content: movies, television programs, music, books, and the like.  The better the content, the more “entertaining” it is.  However, a new study released today highlights that the majority of consumers now have a different definition of entertainment, one that extends beyond content to include interactions that they have via social networking sites.  Given this, publishers need to reevaluate the business they are in.   In a world of Publishing 2.0, we are in the audience business, not the content business.

Today, Edelman released summary findings of its fourth annual Trust in the Entertainment Industry study.  The notable highlight is that over 70% of people 18-34 in the U.S. consider social networking to be a form of entertainment.  Over the past year, Edelman found a significant rise in the number of people who consider the web a source of entertainment; in 2010 the Internet surpassed movies and is now second only to TV.  Additionally, out of all of the entertainment categories, social networking scored the highest in perceived value, with 40% of U.S.  respondents saying that it offers excellent or very good value.

This highlights how the entertainment sector is undergoing an experience revolution, with consumers revealing that not only is social networking displacing traditional media as a significant mode of entertainment; but that they appreciate that social networking provides better value than other options.

The implications for publishers are clear:  by creating compelling, interactive experiences for consumers, we not only get them more deeply engaged but can also increase their perception of our value. Read the rest of this entry »

Online Experience for Publishers: Innovate or Die

12 May
2010

by Ben Elowitz

We need an experience revolution.Revolution Fist

Each week, we hear of major publications and traditional broadcasters who are struggling to stay afloat in a digital age with new economics and new expectations.  Despite the promise of interactivity made with the internet revolution over the last 15 years, most publishers have done little more than replicate dead trees online, with zero innovation beyond the hyperlink, the slideshow, and an embedded video now and then.

And yet we can see from the rising successes of the last decade like Facebook, Google, Zynga, YouTube, and others that what catches audience attention is interactivity.

To earn loyal audiences today, publishers need to go beyond content creation:  they need to produce compelling experiences that distinguish them and get the consumer coming back for more.  The Pew Internet & American Life Project concluded that “when asked whether they have a favorite online news source, the majority of online news users (65%) say they do not.”  In an era where the consumer’s cost to switch is the flick of a click, publishers must offer compelling, differentiated experiences to earn loyalty.  Choices abound consumers:  there are scads of publishers online in every category; content suggestions offered constantly via social networks; and blue links proffered by search engines dozens of times per day per reader.  In an environment of choice, as brand experts have known for years, nothing builds loyalty like a great experience.

And now is the perfect time to create those breakthrough experiences.  The enabling technologies for the digital customer experience have improved considerably in recent years: we now have ubiquitous broadband, flash and other streaming video, plus HTML5 and maturing mobile application platforms.   Add to that personalization, targeting and social graph access, and there are some amazing opportunities to innovate.

It’s not just consumers that are thirsty for upgraded experiences.  Advertisers are showing that they will pay more for immersive interaction over basic display ads next to text.   Video ads during full TV episodes on ABC.com, Hulu, and others, or mid-day live sporting broadcasts command many times the CPM of typical display ads. Indeed, according to Michael Learmonth at AdAge, The Wall Street Journal’s online video content is bringing in envy-inspiring CPMs at $75 – $100.

But video is not the only way to create an immersive customer experience online.  Online sites of traditional publishers like Better Homes and Gardens are experience train wrecks (to be fair, they’re not alone in that regard).   Contrast that with the much more successful (certainly from an ad rate perspective) MarthaStewart.com which has many of the same elements – a top stories slideshow, cross-promotions for the print magazine, etc., and it’s a substantially better experience due to the focus on design and usability that is expected of the Martha Stewart Omnimedia (MSO) brand.

Even still, much more can be done with today’s technology to put the consumer’s needs and interests first.  The latest example I’ve seen of true creativity in user experience design is Microsoft’s (MSFT) Glo.    There are additional signs of greatness in the tablet demo that Time Warner (TWX) built for its Sports Illustrated brand.   And The New York Times (NYT) continues to excel in their applications and interactive graphics which enjoy significant pass around (bit.ly shows over 5,000 social media clicks to a recent budget infographic and today’s “A Moment in Time” project has already generated over 100 tweets in the first 15 hours).  But too few companies are making similar efforts to distinguish themselves.  The opportunities are there, and we need to step up.

Consumers will decide which brands deserve their loyalty and content alone won’t cut it.  We are on the brink of a total revolution of experience.  For publishers, it’s reinvent or fail.

Do you know additional examples of publishers innovating?

Hulu Plus Will Be Worth $100 Million in Revenue in 2011

23 Apr
2010

by Ben Elowitz

Hulu Plus SubscriptionRecently I’ve written about why I think the Hulu Plus subscription model will be successful.  Yesterday, Peter Kafka (@pkafka) wrote in AllThingsD that Hulu’s price point is both too high for consumers and too low to satisfy media companies.  I respectfully disagree.

My prediction is that Hulu Plus will be driving more than $100 million in incremental revenue for the company in 2011.   If Hulu grows modestly from its current 19.5 million monthly uniques in the U.S. according to comScore*, and they’re able to convert a small fraction of that audience at $9.95, the numbers are compelling even accounting for the likely double-digit monthly churn.   I expect that the service will reach or exceed a million subscribers by the end of 2011.   Meanwhile, 30% margin or $30+ million would be welcome for a company that only recently announced profitability, particularly if they’re able to avoid traffic cannibalization on their existing free, ad-sponsored streams.

Granted, most media companies are making more on their own sites, but this is largely upside to their existing online revenue.  Meanwhile, a paid model preserves the “premium” value of the majority of their catalog.

Beyond the financial benefit, offering a paid subscription also provides several strategic benefits to Hulu:

  • Gives them a path to move off the desktop and onto mobile and the TV.   The media companies are adamant that consumers not be trained that video content is “free” on mobile as they’ve become accustomed to online.
  • Opens up the service to new content providers including cable, and a much larger catalog of content from their existing partners

Is $9.95 monthly too much for consumers to pay?  When your content is exclusive, and more importantly, the experience is this compelling, I think a small but meaningful segment of customers will open up their wallets.   Of course, that is assuming that Hulu’s subscription offer and experience demonstrate the same outstanding execution as their free service (and marketing) to date.  Many services have failed at charging for video online, but Hulu is in a unique position to finally succeed.

* Footnote: Interestingly this is substantially less than the 43 million uniques announced by Hulu CEO Jason Kilar back in December, perhaps due to the comScore hybrid measurement debacle; I’m using the lower numbers to be conservative

‘Hulu Plus’: Hulu Is Readying $9.95 Subscriptions, And They Will Work

21 Apr
2010

by Ben Elowitz

Dawn Chmielewski and Meg James reported tonight that Hulu will begin testing a $9.95 “Hulu Plus” subscription offering as soon as May 24.  According to their LA Times article, the Hulu Plus offering will open access for viewers to watch many more shows than are currently offered.  (Hulu’s content license restrictions currently allow viewers access to only the five most recent episodes for most shows.)

Last month, I wrote that for Hulu, advertising won’t be enough.  Tonight, I predict Hulu’s subscription program will be successful with consumers, and will be a business success for Hulu.

First, here’s why — unlike many other subscription programs — Hulu’s will work:

  • Outstanding experience: Hulu has nailed the consumer experience. From their innovative video player to their Hulu Desktop application, they have an experience that is worth paying for.
  • Shows people desire: Hulu has the  TV shows that every household knows and wants to watch.  These are among the most popular entertainment brands around.
  • Exclusive access: The vast majority of consumers (i.e. those who won’t use BitTorrent) simply can’t get this content anywhere else, thanks to Hulu’s exclusive agreements with content providers.
  • A great value proposition: Compared to typical cable TV, on-demand packages, and Netflix, Hulu offers outstanding variety at a modest monthly fee.

Net, this is an impressive combination.  Unlike many of the subscription offerings being floated by others, which move information that can be found in many places behind a paywall, Hulu’s offering is unique enough and compelling enough that  it’s worth consumers paying for.

As for the business benefit to Hulu, they are already receiving high monetization.  At reported $100MM annualized revenues over comScore-reported 695MM pageviews per month, Hulu already monetizes at $12 per 1,000 pageviews.  Even if subscribers view 10 times as many pages per month as average users, Hulu will still more than double its revenues from those customers.

With an outstanding value proposition and great monetization potential, this subscription program is a win-win for Hulu and its audience.

Hulu vs. The Networks – The Networks Would Be Foolish To Isolate Themselves

16 Apr
2010

by Ben Elowitz

HuluVentureBeat featured a guest-post from Transpond’s CEO Peter Yared yesterday, and editor Matt Marshall asked me to offer a comment for inclusion.

Peter presents an argument and five predictions as to the balance of power and profits between Hulu vs. its corporate constituents tilting back further towards the content owners:

Hulu sells ads on the video it streams, meaning that Hulu’s ad sales team competes with the networks’ own ad sales teams. Hulu’s sales pitch to the networks was, “let us compete with you on your new content and we will help you monetize your older assets”. But Hulu hasn’t been able to monetize the older TV shows it runs. Pull up any TV show over two years old on Hulu, and all of the ads are public service announcements.

But the original reason for Hulu was not that the networks thought they couldn’t monetize their inventory, but because they believed in the power of a single consumer destination with major network effects.  And that is by and large working.

As I responded in the VentureBeat post, Hulu is working and it’s because they nail their consumer experience.

It is inevitable that in the digital future, consumers will watch what they want, when and where they want it.
Read the rest of the the post, including my featured response about how the networks would be foolish to isolate themselves, at VentureBeat.

For Hulu Too, Ads Won’t Be Enough

29 Mar
2010

by Ben Elowitz

Michael Learmonth at AdAge published an analysis today of Hulu’s financial conundrum:  while Hulu wants to remain purely ad-supported in order to grow its audience, it is struggling with the economic realities that make its current advertising-only model lackluster.

But while Learnmonth’s article portrays “an ideological battle over its future” of whether to stay solely ad-supported vs. consumer supported, I can’t help but read his analysis and take away that it is inevitable:  for Hulu too, just like for the rest of the media industry, a healthy and sustainable model will only be reached when consumers pay for content.

Hulu has attained remarkable success.  It’s the #2 video site by audience, and has created a true breakthrough consumer experience for video that is best in class — and miraculously not only survived the minefield of investor and content provider relationships but prospered with them.  But with the hefty 70% revenue split paid to content providers, Hulu is still challenged to make money on a standalone basis.  Just as the TV networks themselves have seen, the dual (consumer+advertiser) revenue streams of the cable and satellite systems create a much healthier model.

Hulu’s struggles are just another case of how — almost no matter how large the publisher is — advertising revenues are no longer enough for a healthy publishing model.  With an explosion of content created and the huge dispersion of where consumer eyeballs land, the advertising dollars can’t be piled on the way they used to be for the top publishers of content.

It is time for Hulu to — creatively — start offering premium consumer services.

The good news is that Hulu is in pole position to succeed at getting consumers to pay part of the bill.  Under CEO Jason Kilar’s leadership, Hulu has demonstrated that they are extraordinarily strong at product development and partner relationships in a way that lets them make a surprisingly great experience for consumers even with the myriad license restrictions that they need to deal with on the back end.  On top of which, their proprietary content library is worth billions and has earned them destination value for consumers.  They’ve got advertiser relationships and track records, and have even established a strong premium pricing precedent at reasonable fill rates on the ad side so they can keep their appeal broad with a free basic offering.

With those great assets, Hulu has the opportunity to build new applications, content packages, features, and other enhancements that are compelling enough to earn consumer payment.  All of which will put them in a healthier position to not only make profits for themselves, but for their partners.  In fact, for Hulu, it’s not only for the good of themselves and their partners that they should add paid offerings, but for the good of the industry in pioneering the best ways to offer experiences the consumer will pay for.


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