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February 18, 2009

Hulu + Boxee: Internet-based TV is so misunderstood

Posted in: Observations

Boxee? Hulu? Boxee is a free desktop-based media player application for Mac and Windows and Hulu is an internet-based TV content  provider offering videos from multiple media partners.

This post is a response to Hulu’s request that Boxee discontinue offering Hulu TV through it’s application while Hulu sorts out its relationship with its content providers.

You know I’m a Hulu fan and a Boxee fan. I’ve blogged and tweeted about them enough to risk fanboy status. So when I heard Hulu asked Boxee to cut Hulu access I was drafting a rant saying Hulu just doesn’t get it. Then I read the “Doing Hard Things” post by Jason Kilar, CEO of Hulu and have a renewed respect for the vision the Hulu executives are trying to uphold. I especially appreciated the candor Mr. Kilar has brought to their decision. I think it’s the wrong decision, but his astute regard for users wins him high marks and bodes well for Hulu.

The future of TV is not broadcast; it’s internet-driven. The future of web-based TV is the full, large-screen, living room experience.

Hulu has a chance to build ad revenues back into a large-screen TV experience. And they need an application landscape or set-top landscape with players like Boxee, Xbox, Playstation 3, &c, in order to make that happen.

Hulu is in a unique negotiating position. They’re generating ad revenue from television in a time when broadcast ad revenues are on a steady decline and ad dollars increasingly pushed from TV to the internet. Hopefully Hulu’s demonstrated success gives them clout amongst content partners that seemingly don’t understand the future of television — or at least Hulu’s possible stake in that future. Hulu knows the media company butters their bread, and so of course they’re not going to alienate them. The trick for Hulu is to show the media companies that the future of TV is tied to the internet. The future of internet-based TV is the full, large-screen, living room experience.

But Hulu has an uphill battle if its media partners don’t understand the power and the opportunity of desktop media player apps like Boxee and Plex that put web and desktop content on large-screen TVs. Hulu cannot become a long-term success without third-parties enabling Hulu to reach beyond the desktop PC to a large-screen experience. That’s the prize at stake for Hulu. The future of internet-TV is not relegated to laptops; it’s future is the full living room experience.

Lose? Lose? Lose?

Who loses in this particular Hulu + Boxee episode if Hulu can’t soften the content partners? The content partners lose control of their content and Hulu loses ad revenue as Boxee users turn back to torrents for catch-up TV. What’s worse for Hulu is it risks losing ground in the push for relevance on a large-screen experience. Boxee loses momentum as a compelling alternative to subscription TV.

What happens to Boxee? It’s not going away. It’ll stay there in early adopters’ living rooms, attached to big-screen TVs, foreshadowing — and in some ways — sidestepping the coming power struggle between the cable and satellite operators, the content providers and the television device manufacturers.

Enough blogging. I’m going to find out how to get Hulu onto my Xbox.

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