Hulu Continues Its War On Users

from the this-is-not-good dept

We’ve wondered in the past if it’s really possible for Hulu to survive in the longterm, given its awkward position between consumers who want to watch content, and content providers who want to put massive limits on how people can access content. This got plenty of attention in the ridiculous (and totally unnecessary) fight to block Boxee. In that case, even Hulu admits that it would like to allow Boxee (which is nothing more than a different type of browser), but that its content providers won’t allow it (despite the fact that anyone who uses Boxee can simply open up another browser and watch the same content).

One of the biggest complaints with Hulu is that its content is limited only to people in the US, so those trying to access it from elsewhere get a message saying “too bad.” Of course, there have been rather simple workarounds, using proxy servers to access the content. A couple months ago, when I was in the UK, I wanted to watch something on Hulu, but was blocked because of the location. Luckily, I just logged into my VPN, and Hulu let me through. Yet, today that might not work. Apparently Hulu has started blocking various anonymous proxies, saying that to watch Hulu, you need to log out of the proxy/VPN and “prove” that you’re really in the states. Beyond being ridiculous, this can be a security risk. Many of us use VPNs for security reasons.

Again, my guess is that this is due to pressure coming from Hulu content providers, rather than Hulu itself. It makes little to no sense for the company to waste time and resources blocking people from viewing their content. However, it’s that ongoing split, whereby Hulu has to waste time and resources making its service worse that may eventually spell doom for the company. Those who are blocked are likely to just go elsewhere — such as BitTorrent — to find the content they want, and thus the content providers won’t get any ad revenue, whereas on Hulu they do share in the ad revenue. It’s difficult to see how it makes any sense. Sure, some might point out that there are “rights” questions involved — since the content providers may not have licenses to display the content outside the US, but given the basic geographic restrictions the site has set up, you’d think that Hulu had passed a sufficient bar that no court would accuse the company or the content provider of willfully violating any license agreements.

There’s a pretty simple maxim that Hulu may be unable to follow: if you have to spend time and money making your product worse, you’re going to have a hard time surviving. I recognize that Hulu has been something of a success to date, but it’s hard to keep that up when you keep screwing over your users.

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Comments on “Hulu Continues Its War On Users”

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54 Comments

get with the times

why are content publishers still using these dated regionalized licensing models anyhow? They always seem to cite them when people complain about not being able to get what they want when/how they want (as if these licence agreements are non negotiable or something) … but its not just with old content. they seem to STILL be making these boneheaded licence agreements seemingly for the sole purpose of being able to limit consumers. Stop making regional licencing agreements and renegotiate the existing ones and its problem solved. Frankly artificial regionalization of the internet is only going to drive people underground.

Jimbosays:

Re: get with the times

I’m sympathetic to your position, and I really don’t want to defend the jerks at billion-dollar media companies; however, you can’t say something is “boneheaded” unless you’ve seen the spreadsheet. I deal mostly with independent film makers. If you sold a kidney to make a film, then somebody offered you $250K for “all rights” in Europe, then you bet your bippy you’d make a “boneheaded” deal. The same economics work for big companies. Saying that they should renegotiate contracts is naive – it would be incredibly expensive, time-consuming, and you can’t force the other party to agree.

Re: get with the times

Because it’s the only place content providers can still make money (foreign sales). Typical television content production companies today eke out a very small profit, if any, on the production of content for networks (NBC, CBS, et al.) The prodco’s make most of their actual profit on selling rights overseas, at least in the case of scripted content; and it’s usually not much.

In the world of reality television and gameshows, the big players (Endemol, RDF, Freemantle, Grenada) base their business model on Format revenues, which means they have different business entities in different countries who pay the parent company for the right to make their own versions of “Deal or No Deal” or “Who Wants to Be A Millionaire?”

In those cases, the “local” subsidiary/production company fights tooth and nail to make sure that if you want to see “Deal or No Deal” in their territory, that you can only see their version of it. Not a version from somewhere else.

It’s ridiculous, and as much as I’d like to blame the networks on this one, I can’t (except to say, “hey, if they ponied up enough $$, the prodco’s would happily sell them all rights, but that’ll never happen).

One other huge reason this happens, and I can’t overstate this enough, is a HUGE problem with music rights licenses. When we produce a show, we only have a certain budget for music licenses. Invariably, this means we cannot afford to license “all rights, worldwide, in perpetuity,” which is the best place to be, but ungodly expensive (thanks, music labels). So we end up buying piecemeal rights, restricted to only certain territories for a certain length of time.

This setup, really is the primary reason a lot of shows from the libraries of prodco’s and networks aren’t online. It’s because we can’t clear the music rights, or if we can, it’s prohibitively expensive to do so.

One recent example, was a show we wanted to put online (Google Video, and a few others) from the Endemol library. There were 8 episodes of the (cancelled) series, and the theme song was “Eye of the Tiger.” Because we didn’t have online rights negotiated at the time the show was produced, the music rights-holder wanted $60,000 USD per episode for us to be able to put it online. That’s almost $500k, and what would we get from our online partners? A split of ad revenue. Which, even in the best case wouldn’t even come close to recovering that kind of outlay for years and years to come.

This is a very, very common problem right now in the business, and hopefully in the future music rights will be easier, more comprehensive, and cheaper to obtain. But until copyright law is reformed, don’t expect to see a lot of old shows coming out of the vaults for exactly this reason.

Tgeigssays:

Sigh

That cabin in the woods gets more inviting all the time. A little fishing, some biking in the hills, grilling outside. Perhaps it has finally become time to remove television and television content from our lifestyles?

I mean, if they want to make it difficult, there are certainly other grattifying, and frankly far more spiritual ways for us to spend our time.

Except for South Park. Oh, and NCIS. Um, and the Cubs, I gotta watch the Cubs.

Dammit.

Davesays:

Re: BBC

Yep, they do, and for the same reasons – not out of choice, but because the many production companies they work with forbid it.

Difference here is that Hulu seem to be taking a VERY active stance, whereas the BBC know that while their systems aren’t perfect and can be circumvented, they’re good and secure enough. Hulu seem to be aiming for 100% watertight control, which is just asking for trouble, really.

Re: BBC

The BBC are a special case, since they’re funded by taxes. No such thing as ad revenue, so nothing to share online after the costs of opening content up to a few billion extra people. Also, they’re actually prohibited from running 3rd party ads on their broadcasts.

With the US content providers, they’re actually trying to reduce the potential audience they can legitimately reach when they could leverage the bigger audience for greater ad income. The problem would be targeting the ads, but there shouldn’t be any real reason why they can’t simply target local ads instead of blocking the IPs outright. Other than violating their existing outdated licence agreements of course…

Anonymoussays:

Re: BBC

yes, but for slightly different reasons. The BBC is unable to use adverts to finance it due to its weird position as a taxpayer funded organisation. Therefore it is only financed by UK licence payers. Technically you cannot watch it even in the UK unless if and only if you have paid for a licence fee as well (read their T&Cs).

Matsays:

it's not hulu, it's disney, remember

Remember, disney bought a 30% stake. You can bet without even thinking twice that they are probably behind this.

Meanwhile, count me in as one more user who had to go BACK to torrents because hulu only hosts “the latest episodes” just so I can show my friends a show that is on mainstream TV (since we don’t have or want TV’s – 24&30″ monitors look better).

Anonymoussays:

Re: it's not hulu, it's disney, remember

Except Disney already has extremely convenient streaming to my TV through Netflix.

I’m not saying Disney is a great company, but if your kid likes Zach and Cody, he can watch commercial free streams until you think physical comedy has lost its charm.

Meanwhile, broadcast networks have been restricting hulu.

lulzsays:

Uh

I was in the UK, I wanted to watch something on Hulu, but was blocked because of the location. Luckily, I just logged into my VPN, and Hulu let me through.

you need to log out of the proxy/VPN and “prove” that you’re really in the states. Beyond being ridiculous, this can be a security risk. Many of us use VPNs for security reasons.

…well, you weren’t in the states, so you were trying to circumvent their countermeasures, even if you do use VPNs legitimately.
Conversely, you are justified because you are a US citizen.

SteveDsays:

Re: Uh

“Conversely, you are justified because you are a US citizen.”

So if a non-US citizen went to America they wouldn’t be justified in watching Hulu? ­čśŤ

Sadly, I don’t think regionalised release is going any ware very soon. And if proxies are locked out, there’s always a load of Chinese streaming sites to pick over.

BigKeithOsays:

Proxy or Bust

I’m in Canada, we have no option to watch Hulu. I am too lazy to bother with a proxy and prefer to watch TV on my actual TV set (with the aid of my 360 of course). So first problem is Hulu is blocking me because I am located slightly further north than most Americans. Second problem, Hulu won’t let me download the show to stream across my network at home.

I wish there was someone out there who offered the options I am looking for… Oh wait, I can do all of that using BitTorrent!

Thank god for pirates.

Back to Basics

In order for a system to be flawless, the world must be flawless. Companies that spend millions on content, or any other product for that matter, need to make their money back somehow. At the same time, people want things for free and wouldn’t use it otherwise. On the other hand, people aren’t willing to work for free so who are they to complain?

Life is a two edged sword period. How do you make everyone equal in a world of competition? How can we build an open source environment when our economy is based on currency and wealth of one another?

Why is making the videos anymore important than distributing them? Don’t they both need each other? By now, they should have some type of video advertising model created. Seems to me it’s inevitable that the big dogs are going to have to play nice with the small and vice versa.

Re: Back to Basics

You’re looking at it the wrong way. Regional restrictions are to protect the outdated current business model for these content providers that depends on geographical restrictions. Such restrictions no longer apply, so the business model suffers.

If the content providers can utilise other ways of making money that would allow the content to be open to the entire world, they would add approximately 5 billion extra people (i.e. those who don’t live in the US) as potential customers. Rather than changing their business methods to take advantage of this, they’re trying to place artificial restrictions on the content.

Those people who are negatively affected by such restrictions are more likely to get the content via avenues that make them $0 (e.g. P2P).

“Companies that spend millions on content, or any other product for that matter, need to make their money back somehow.”

Exactly. So, why are they actively refusing revenue from people who don’t happen to currently sit on a patch of dirt within the continental US? Seems counterproductive, to say the least, especially when travelling businessmen like Mike are probably more likely to use a service like Hulu than the average TV watcher.

Anonymoussays:

Re: Re: Back to Basics

A great example of this in America is Naruto. It’s a anime that gathered a pretty large following. Eventually it appeared (2 years or more late) on Cartoon Network.

Fansub groups formed and subtitled episodes were released with 24 hours of the Japanese airing. Fans watched for free.

Someone in Japan wised up and released an HD version for $$$ and an SD version (on hulu, crunchyroll, etc).

Suddenly, 300 million new viewers and a new revenue stream. Big fans still buy the DVDs. Everyone wins because the business model was improved.

Jasonsays:

Re: Back to Basics

You speak as though open source and open content are antithetical to capitalism. Nothing could be further from the truth. Sure there are plenty of idealists out there, but a LARGE plurality of open providers are open for specifically capitalistic reasons.

There’s huge money to be had out in the open.

JohnForDummiessays:

I don’t quite get why viewing Hulu content on something other than IE/Firefox/Etc can be hurting them at all… The advertisements are still there.

People want convenience. Plain and simple. I want to use Boxee/XBMC/MCE so I can watch content on my TV and use a remote to navigate. Using a web browser is not as easy using a remote, and Hulu’s site pretty much sucks for that anyway.

If I can’t use my ‘browser’ of choice, then I’m not going to stick around and use their service. Fewer viewers, fewer ad dollars.

They can’t get pissed because people want to watch network TV programs for free… They’ve always been free and ad supported. Because of the internet, this is the first time in broadcasting history that they have a way of tracking EXACTLY how many viewers have seen an advertisement — and they know this no matter if you use Boxee or Firefox or anything else — and yet, they want to limit the number of viewers? Ridiculous.

unusableOttersays:

This is Not Hulu's Decision

First, Boxee is no longer blocked by Hulu. That should be put out there. I know; I was using the Hulu feeds on Boxee just yesterday, and it is pretty fantastic.

Second, this is in no way Hulu’s decision. Hulu has limited licenses from their content providers, and, obviously, international distribution is not included in these agreements. This could be for a number of reasons, but, suffice it to say, this is almost certainly not Hulu’s decision. Why on earth would they want to limit their international reach? Answer: they wouldn’t, unless they were obligated to do contractually.

Give Hulu a break. They are a free service that delivers extremely high quality streaming content. They are also on pace to clear $175M in revenue this year, so yes, they will probably be viable in the long term.

Re: This is Not Hulu's Decision

First, Boxee is no longer blocked by Hulu. That should be put out there. I know; I was using the Hulu feeds on Boxee just yesterday, and it is pretty fantastic.

Well, it’s been a back and forth. Hulu still says that it should be blocked.

Second, this is in no way Hulu’s decision.

Right. That’s what we said in the post. I’m not sure why you’re implying we said otherwise.

Answer: they wouldn’t, unless they were obligated to do contractually.

Except… no. Hulu could easily point to the basic geographic restrictions and say “look, we’re blocking as much as we can.” Going on to block proxies is going above and beyond.

unusableOttersays:

Re: Re: Re: This is Not Hulu's Decision

Again, I think this is a tiny percentage of the population. The people who read techdirt are not representative of your average internet user. People STILL fall for Nigerian phishing scams. And yes, while making Hulu the preferable alternative to a torrent tracker is one goal, attracting the far, far larger computer illiterate audience is another goal. Even David Pogue recently admitted he had no idea what a Rickroll was.

Please don’t just consider the moral crusade. Try to put yourself in the shoes of a company in an extremely delicate legal and financial balance.

unusableOttersays:

Re: Re: This is Not Hulu's Decision

Mike:

The title implies that this was Hulu’s decision, ala, “Hulu Continues Its War On Users.”

It seems to me that the persuasive authority in this case is the Yahoo litigation, wherein French ISPs required Yahoo to block access, in France, to Yahoo group pages selling Nazi memorabilia. The point is that blocking proxy servers is not actually going above and beyond what is necessary, it may, in fact, depending on the standard of the court, simply constitute due care.

Additionally, the amount of people who use proxy servers, is probably far less than the people who do not. I think only part of Hulu’s strategy is to woo away users who may use alternative sources, like Bittorrent. More importantly, however, is to generate a fan base following of its own. For example, I’d say 9 out of 10 of my lawyer friends do not know what a proxy server is; but 8 out of 10 do watch Lost and are excited about the fact it is now on Hulu.

I don’t think Hulu is out to win some grand crusade, their corporate literature notwithstanding. I think that they are out to create a functional, stable and profitable long term business model. That means incremental steps and playing ball with the big guys in the room, because they call the shots. The “Hulu” everyone here seems to be talking about already exists, and it is called SurfTheChannel. That type of service is illegal in the States, and probably always will be. Further, if Hulu’s goal was to bring about the end of copyrights, as so many of its competitors hope to do so, the only thing that differentiates Hulu — its legality — will be gone. It is precisely because Hulu operates legally, with licenses, that it has access to high quality streaming content, instead of camcorder rips covered in advertisements written in 3 different Southeast-Asian languages.

“There ain’t no such thing as a free lunch.” I really wish you guys would cut Hulu some slack: they ask for literally nothing from you and provide a high quality service, while simultaneously they are aggressively seeking to license as much additional content as possible simply for your viewing pleasure. Why the heck are you mad at them for trying to take precautions to ensure that their business is not shut down by the courts or their vendors?

The infamous Joesays:

Re:

I think we can all agree that no one blames Hulu for trying to play the entertainment industry’s game.

I think we can also all agree that the entertainment industry is making a huge mistake. Here’s the break down:

I am going to watch the show I want to, when I want to. This is not up for debate. Just because I had to work later than normal and missed my show doesn’t mean I’m going to say “Oh well.”

I will gladly watch their ads on hulu, as it’s more convenient to stream it than it is to download it, watch it and delete it. That being said, if they don’t want me to watch their ads, they can go ahead and block me and I’ll go with the torrent option. I still have never seen a torrent with the commericals left in.

I just don’t understand why they don’t get it. They can choose to have me watch their ads or choose to not let me watch them.. why would they ever not want to make money?

/rant

AdGuysays:

Advertising

It’s pretty simple – Hulu wants the top brand advertisers to pay the bills. The top brand advertisers in America are only responsible for DOMESTIC advertising and demand campaigns to be geo-targeted to the USA. Therefore, international traffic is not able to be monetized. Once they get the ability to open up (and sell) international traffic, then it will change. LOL – it’s not premeditated some slap in the face to people outside of the US…it’s business…get a clue.

Same Deal Watching The BBC On The Net

There are a lot of programs I would love to be able to watch of the net that are provided by the BBC on their website. But I’m in the USA! I can’t watch! USA IPs are filtered out. Why? Copyright concerns.

I too have tried the proxy route, with poor success. The BBC either filter out the proxies or they are so incredibly slow as to make the attempt a waste of time.

(;_;)

I tried to use all those “legal” methods to watch my shows.

No way. Can’t.

Well, there’s a alternative. They don’t want me to use it, called it “illegal”, call me “pirate”, claim is against the “law”, but, still, they show no “legal” alternatives.

They could stop “piracy” if they wanted. They actualy could. But, that only if they “catch” the user before he’s tempted to try the “alternative”, after that, no way they are going back…

So, thanks to all the rejections and limitations I am seeing over a hundred TV shows, ad-free, HD quality and for free. Can’t really thank them enough.

hula loversays:

You seem to miss the very obvious part that this is free and that this content isn’t available anywhere online other than BitTorrent which screws over the content providers. Especially the independent film makers who don’t receive much for their content but hey everything should be free for you, right. Don’t answer you ingrate.

F*** THE NETWORKSsays:

I have only 3 shows that I watch. All will be torrented ­čśÇ
Congrats hulu you lost another viewer.
Congrats to the Media Execs, your douche-bag practices will hopefully convince people never watch CRAP from you again.
I have no use for DVD’s. Why bother putting the DVD in the drive, waiting for it to spin-up and watching the episode once (maybe twice). I can just double click on .torrent and boom I got it.

Grunchliksays:

Are they insane?

I suspect that Hulu will not be around in the near future!

I just saw an article that says that they plan to charge a fee for the content and still have commercials.

I wonder which genius came up with that one!!!

I for one will take my “vieweing” elsewhere!

If I were to pay for content. (…which I?l NEVER cosider!)
I would want it to be commercial free….yes no commercials what so ever!!!

So RIP Hulu (…it was fun while it lasted!)

…to those fat “executives”: “…I hope that you go bankrupt and stand around the corner selling pencils or something.”

MORONS!!!

Grunchliek

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