Losing the Remote, Part II: Warming Up to Online TV

 

After I declared my intention last week to go on an all-Hulu diet, it seems like news about the video site has been popping up everywhere. Maybe it’s just my selective filter looking for affirmation.

Today Saul Hansell writes about Hulu in The New York Times, and compares it to YouTube. In Hulu’s first year, it’s been able to sign up far more content producers than YouTube. This is partly a result of its association with NBC Universal and Viacom, which gives it a whole host of popular shows like “The Office” and “The Daily Show.”

But the site’s tighter content rights management has also attracted lots of third-party movie and TV producers (similar to what iTunes did for digital music). And its viewing experience appeals to producers — far exceeding the choppy and spartan experience that gives YouTube its faux underground appeal.

To be fair, that’s the model that YouTube has been going for. But combining a user-generated content model with one that caters to professional producers meets a considerable “serving two masters” challenge. This is what it’s now facing as it tries to sign on content producers like MGM.

Winning Over Advertisers

We’re hearing more and more about YouTube’s monetization challenges, and Google CEO Eric Schmidt’s outspoken position that it’s been a disappointment. This has a great deal to do with the challenge that everyone is facing in online video — integrating ads in a way that isn’t intrusive to users who’ve developed certain expectations for the “on-demand” medium.

But it also has to do with advertiser demand. It’s a well-known issue that many brand advertisers don’t want to be associated with YouTube’s content — sometimes racy, sometimes just plain off the wall. And such a wide range of “tail” content inherent in a UGC model makes it difficult to contextually target ads in a relevant way.

Compare that with Hulu, where advertisers know exactly what they’re getting. This usually takes the form of one advertiser sponsoring an entire episode of a TV show with “limited commercial interruption.” This isn’t much of a leap from the same content on which they’ve advertised in the past — it’s just on a different screen. And we all know that Madison Avenue as a whole, doesn’t take big leaps very quickly.

Getting Warm

After being on my all-Hulu diet for just a week, I’m convinced there is a tremendous amount of content and possibility there. As consumers realize this more and more, we’ll see more content producers motivated to move their content online (advertisers too). This is especially relevant at a time when consumer cost reductions will cause lots of people to ditch their $100+ cable bills.

Add high-def (Hulu already offers 480p viewing), and lots more people could question why they’re paying so much for cable. IPTV rollouts, and the competition they’ll bring to the market, could lower prices for cable. But in the meantime, this could all have a transformative effect on the way lots of people watch television.

Source: TNS Media Intelligence

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Related: TechCrunch reports from last week’s Web 2.0 summit on AT&T’s vision for integrated three-screen content management (IPTV + mobile + broadband). See also: AT&T’s Ralph de la Vega discusses this vision in our past coverage.

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