Listening to Hulu's CEO Jason Kilar today at NewTeeVee Live, it's hard not to admire what he and the Hulu team have accomplished. For the first time, Jason disclosed 2010 projected revenues of $240 million, up 10-fold from $24 million in '08 and $108 million in '09, which is pretty impressive growth. As always, Jason's message is extremely user-centric and forward-looking. Hearing him speak, you definitely get a sense of the positive, relentless efforts he's led to improve the service.
A key part of Jason's message is that premium video should, and will be available anytime, anyplace and on any device in the future. It's a wonderful "motherhood and apple pie" message that's hard to argue with as a viewer. Unfortunately it's also a message that's bumping up against some hard realities in the TV business that Hulu is going to have to surmount to ultimately succeed. Here are at least a few of them:
Hulu's owners don't want their content on the TV - Jason may want its content to be everywhere, but its owners don't. This has manifested itself in Hulu blocking Google TV, the Kylo browser, almost certainly the new boxee box and other connected devices to come. Om Malik asked Jason about this during Q&A and his response, essentially that networks get paid by distributors and therefore their economic interests need to be respected. Networks may be enticed by the better advertising future that Hulu.com is pioneering, but for now at least, they want that limited to online, computer-based viewership.
Retransmission consent pursuit cements content owners' desire for more than just advertising - It wasn't that long ago that broadcast networks were all about reach, to drive more ad revenue. But now retransmission consent payments have become their top priority. With some high-profile wins under their belt (Fox with Cablevision, Disney with Time Warner Cable, CBS with Comcast, etc.), the pursuit of retransmission consent acts to preclude Hulu.com from showing up on TVs through connected devices any time soon. Over time that undermines Hulu.com's ability to truly recognize Jason's vision.
Hulu Plus's content efforts are pinched from all sides - Though Jason said that Hulu Plus subscriptions are "running ahead of plan" the service, which is Hulu's main opportunity to get to the TV, is pinched from all sides from a content perspective. As I've explained previously, Hulu Plus has Netflix, TV Everywhere, and even the prevalence of the free Hulu.com content (which accounts for the vast majority of Hulu Plus's content library) to contend with. Now, with Comcast acquiring NBCU and inheriting a key ownership stake in Hulu, there will be even more resistance to see prime cable content leak onto Hulu. If the IPO is successful, Hulu's resources to acquire more premium content for Hulu Plus will be enhanced. For now though Hulu Plus's content selection is underwhelming.
Jason's vision of TV's future is extremely exciting and the proof points of its pioneering ad model are really encouraging. However, it is operating in an environment of complex priorities by its content owners, which will act to circumscribe its efforts. Over time we'll learn just how far its owners are willing to let Hulu push the envelope.
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