Is Hulu Too Successful for Its Own Good?

Fact: I have never owned a television. When the second Iraq war broke out, I had to borrow one so we could watch. Until a few years ago, the television I watched was limited to what I happened to catch while out and about, and to what I felt like buying on DVD. I tended to wait for shows to end so I could buy the boxed sets, and lagged far, far behind everyone else and their television viewing, which I didn’t really mind. I appreciated and loved the medium as a method of expression, but didn’t really follow it in real time. I suspect sometimes my delayed perspective was at least interesting.

And then various networks started putting their shows online on their websites, and I delved into the wide world of actually watching shows vaguely around the time they aired, right as everyone else was going to DVR and saving shows for days or weeks later. And I sort of dug it, following shows at a more leisurely pace than watching a set of DVDs. It definitely changes the nature of the show in a way you might not be aware of unless your experience of television was like mine, of swallowing great clots of episodes all at once instead of having to wait every week. I got cliffhanger endings more, and also saw where slow pacing could be a serious problem, how you could quickly tired of a show after one or two sluggish episodes that wouldn’t be a problem sandwiched between more active ones if you saw them back to back, instead of a week (or more) apart.

Along came Hulu, running not just current shows but backlogs, and I was in hog heaven. So much television to watch, so little time. Hulu grew pretty rapidly and it’s easy to see why. Right as it started to get big, the economy started tanking. A lot of households were faced with the ‘television or Internet?’ decision and Hulu made it for them. Why pay for television services when you can get most shows for free? And, of course, where’s the tipping point where you decide you don’t need to see a show as it airs for $50 a month and you’d rather buy the DVDs than the expensive cable package?

As recent rumblings suggest, Hulu may actually be too successful for its own good. Television and cable providers are starting to grumble about the loss of revenues from households canceling their subscriptions. I don’t know how much of that can fairly be attributed to Hulu specifically and how much of it is about budgeting and economies in a time when a lot of people start to view television as a luxury they really don’t want to pay for. But Hulu certainly plays a role, and the television industry is clearly starting to have second thoughts about it.

Writing at the LA Times, Dawn C. Chmielewski and Meg James highlight the key issue here:

The crux of the problem is that Hulu’s ad sales are still dwarfed by some $30 billion annually in programming fees that pours into the media giants from cable, satellite and telecom providers. Those fees support the cost of producing content, and undercutting them by steering viewers away from TV and to the Internet would jeopardize the sturdiest financial leg of the TV industry.

It’s not unusual for a content distribution model to move ahead at a faster pace than people are ready for, but the problem Hulu is facing is the need to try to cram itself back into the box, to howls of outrage from the public. Setting up fee-based models for accessing some content (and sweeteners, like allowing people to see shows earlier on Hulu Plus than they can on the free service) is the first step, but I suspect it’s not going to end there. I note, for example, that the service has stopped offering the option of watching a single long ad at the start of a show in lieu of the ad breaks.

Hulu’s struggle is taking place within a larger shift in media. Consumers don’t want to pay for content anymore, and they’re not afraid to complain vociferously and go elsewhere when content providers charge or try to shift their models; look at the brouhaha over the New York Times and its decision to go back to offering a limited number of free articles for those who don’t want to pay for a subscription. What Hulu, the Times, and other publications are learning is that ad-supported media is not necessarily self-sustaining, and that the alternative is charging media consumers for it.

If those consumers aren’t willing to pay, that definitely leaves the content creator in an awkward position. Viewers and readers are still expecting the quality of paid media, but aren’t willing to participate in that process, which leads to situations like news publications soliciting free work, making it harder for journalists to make a living. Hulu’s promotion of a number of web-only shows and events definitely paves the way to soliciting work for free from filmmakers and other video content creators, who then have to finance their sometimes very expensive projects on their own, making some significant cuts to quality so they can deliver for free.

The media has been struggling with this issue for several years and it seems that we have finally reached the tipping point, where unsustainable models are breaking down to the surprise of consumers who have never been in the role of content creators. Content creation, despite being work, often arduous and costly work (have you ever tried conducting investigative journalism without the backing of a major media company?), is treated as a service people should be giving up for free. Hulu’s lessons are about a lot more than whether you should be able to watch House for free online.