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It is being widely reported today that Fox is removing next-day content from Hulu for everyone but selected “verified” cable and satellite subscribers, and that other networks are considering following suit. Under the new plan, the only people who could watch content in the week following the original airdate are people who already subscribe to some subset of approved cable and satellite services. This makes sense everywhere but in reality.
When it was first announced, one of the most amazing things about Hulu was that it suggested that the TV industry had actually learned some lessons from the music industry. Enforcement alone was not going to eliminate piracy. However, if you give the public an easy, reliable, legal way to access content they will flock to it.
The TV studios appeared to be recognizing that, while people prefer illegally downloading shows to nothing, they prefer an easy-to-use, legal service to illegal downloads. Hulu promised next day viewing of shows in exchange for watching a few ads. People loved that deal. In 36 months, Hulu went from two content partners and a dozen advertisers to 627 advertisers and 250 content partners.
Strangely, this success caused the studios to forget what drove them to create Hulu in the first place. For the past two years, content owners have forced Hulu to take steps that make it a less attractive alternative to piracy. They limited the browsers that viewers could use. They imposed irregular rules on when and for how long episodes and seasons of shows were available, undermining the public’s confidence that Hulu would have what they were looking for. They pulled some of the content behind a Hulu Plus paywall, although to their credit anyone was eligible to join Hulu Plus, not just existing cable and satellite subscribers.
Now, content owners are closing the door on new programming for anyone who is not a cable or satellite subscriber. In the short term, this helps the networks protect the value of their contracts with those cable and satellite providers. In the long term, as the Wall Street Journal noted, it “kicks off the great web video piracy boom of 2011.”
Making Hulu harder to use will push people back towards illegal options. That movement will continue as long as, in the words of Slate’s Bill Wyman “the easiest and most convenient way to see the movies or TV shows you want is to get them illegally.” Hulu originally undermined the truth of that statement. Now Fox and any networks that follow are doing their best to keep it true.
This also harms consumers (and networks) in another way. It takes limitations built into the existing cable and satellite TV infrastructure and unnecessarily duplicates them online.
Currently, consumers have a very limited set of choices when it comes to subscription video. If they are lucky, they can choose between a pair of satellite services and maybe two more cable services. For many, those options are much smaller. This limitation is a byproduct of physical reality. Satellite TV requires the ability to mount a dish with clear line of sight to the southern sky. Cable requires physically hauling a cable all the way to your house.
Internet video does not suffer from these limitations. Once you have a broadband connection, you can access any internet delivered video service. Those services do not require a satellite dish mounted with a clear line of sight to the south, or dragging a new wire to every consumer’s home. Freed from these limitations, internet delivered video promises a new chapter in video competition.
This competition benefits consumers, but it also benefits networks. Instead of being beholden to one cable company to reach viewers (as Fox and Cablevision illustrated in New York City last fall) there would be multiple paths to reach the public and multiple partners to negotiate with.
But none of this seems to matter for networks. They have relied on a business model in the past, and they will cling to it in the future. Instead of nurturing services that consumers want, networks appear to prefer to spend their energy finding new ways to step up enforcement (and pushing for laws that will break the internet without actually reducing illegal activity). It would seem that the brief period of actually trying to meet consumers' needs is nearing an end.