Hulu's Kilar plays offense
I guess I shouldn't have been surprised, but it was refreshing nevertheless to see Hulu CEO Jason Kilar make the case yesterday at the National Assn. of Broadcasters conference in Las Vegas for networks and studios to be more aggressive in making content available online. His admonition: when competing for viewers on the Net, it's better to play offense than defense. According to Kilar, Hulu is collecting more per commercial on its most popular show, "Arrested Development," than prime-time TV shows can charge. The higher CPMs reduce the risk that Hulu could hurt the networks' bottom lines by drawing viewers away from the TV set.
(UPDATE A helpful Hulu PR person called Friday to say that Kilar was using "Arrested Development" just as an example -- the higher-than-prime-time CPMs aren't limited to that show.)
Granted, Hulu runs about a quarter of the commercials that the networks do, so content owners might feel the pain if millions of viewers switched to watching shows on their PCs. But that's not a realistic concern for two reasons. First, people want to watch television shows on their televisions. A computer is not the first place viewers will go for their favorite programs, it's where they'll go if they miss an episode, or hear about something good after it airs. And second, it's conceivable that Hulu could generate as much per viewer as the networks do. Witness how well CBSSports.com did with the last NCAA basketball tournament. According to the Washington Post (and Silicon Valley Insider, whose numbers are slightly different), the online version of the tournament generated more per viewer than the televised games.
Kilar drove his point home by comparing "Arrested Development," which Fox canceled during its third season in 2006, to another defunct series, "Felicity," which ran for four seasons on The WB. The former is making money for Fox through Hulu. The latter, which is easily found online but only in bootlegged versions, is generating zero dollars online for its copyright owners.
"The world will not beat a path to your door," Kilar warned the audience at NAB. Unlike "oxygen, food or shelter," he said, media is consumed on impulse. "You have to make it easy. You need to be relevant in a number of different environments." Even a hit as big as Fox's "American Idol," which has drawn 25 million viewers, is being missed by 278 million people in the U.S. alone, Kilar said. "There should be a lot more people watching `American Idol,'" Kilar said, and the way to do that is to "make is accessible on demand in a number of different environments."
Hulu, by the way, offers 747 excerpts from "Idol," but no complete episodes. Hulu co-owner News Corp. also owns Fox, but "Idol" is the property of FremantleMedia.
One more Hulu-related note: I'm a few weeks behind on this, but I've got to tip my hat to NBC Universal's Jeff Zucker for the hilarious intro he did for "My Name Is Earl" a couple of weeks ago. It's an inside-jokefest that plays off his image as a suit who views writers as just a cost center. I've embedded a clip with my favorite line, but you should follow the link above to get the whole thing. On second thought, if you didn't pay any attention to the protracted battle between the studios and the Writers Guild, skip the clip. You're not the target audience.
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Mr Healey:
Do you believe the film&tv business learned anything from the music business' mishandling of the internets?
I know how industry likes to extract all the revenue possible from the R&D investments they've made in existing techmologies and all that...
But is there not revenue for them where the consumer could go to a content-owner's website, access their entire library, and watch an episode at a dollar a pop?
How long till the internet-on-your-tv is the one-stop shop for all of the content you currently watch through cable and satellite? In other words, what is now the cable box is actually an internet connection.
Too difficult for them to corral the viewers? Bandwidth not there yet? Gotta figure out the viewing device?
thanks
Posted by: $30/hr. | April 24, 2008 at 07:07 PM
Yes, I think the studios learned that they had to be more aggressive online to compete with piracy. And I give them lots of credit for putting so much of their material online as free streams or paid downloads. What they haven't done, though, is try to compete with cable, satellite or over-the-air stations by making their shows available online as soon as they're broadcast, or by providing a comprehensive collection of shows on demand. The main reason, IMHO, is that they don't want to undermine their lucrative conventional lines of business. And I think that will remain the case until advertisers are willing to spend more money online.
Content owners also reluctant to offer HDTV through the Net -- too many concerns about piracy and viewers' bandwidth limitations. We'll start seeing more HDTV online this year, though, along with more complete TV offerings through the Net (heck, that's sort of AT&T's approach anyway, although that's more TV over Intranet than Internet). Probably within five years you'll see someone in the U.S. doing a credible cable competitor entirely through the Net, assuming cable modems and DSL continue to improve their throughputs.
Posted by: Jon Healey | April 24, 2008 at 10:59 PM
thanks for replying, appreciate your insight
exciting time with all of the transition coming down the tracks.
wish it meant the content producers would take more risks and give us more interesting stuff instead of more sequels, more blockbusters, more explosions, more michael bay, more brett ratner, etc
thanks again
Posted by: $30/hr. | April 25, 2008 at 12:12 PM
I find that most of my online viewing takes place, well, while I'm online. Usually I'm working on a website or in Word or Excel, and Hulu makes a great side show. I've enjoyed seeing old Alfred Hitchcock Presents that I hadn't seen in years, episodes of Airwolf and even college football from earlier this year. It makes great background, so even though when I'm really watching it's on a TV, there's still plenty of time that I'm doing it online as well.
Sometimes it's fun to go back and catch a detail that wasn't clear the first time when I'm not in front of the DVR. And with today's climate of multitasking, it is more productive to watch at the computer. So conceivably the network could capture my view first-run, then sell me the DVD, then add my view to their CPM through Hulu. Sounds like a win-win to get stuff online, and quickly, to me.
Oh, and here's a show for which I did exactly that:
http://series.airwolf.tv/episodes
That's pretty convenient, wouldn't you say?
Posted by: SludgeHeap | April 30, 2008 at 09:50 PM