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September 19, 2011

Why Netflix’s split won’t help with its real problems

Filed under: movies, netflix, television, video — Rakesh Agrawal @ 11:30 pm

Today’s announcement by Netflix of changes to its longrunning service will do little to solve the very significant challenge in front of Netflix streaming: content licensing.

In his blog post, Netflix CEO Reed Hastings compared his company’s challenges to those of AOL and Borders:

Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

While all of that is true, Netflix is nothing like these companies. AOL and Borders died largely because of internal conflicts and lackluster attention to emerging technologies (broadband in AOL’s case, e-readers for Borders). Those are not the real challenges that Netflix faces.

Hastings and Netflix have always been forward thinkers. The company was launched at a time when DVD players were just starting to take off — but it wasn’t named DVDFlix. They experimented with creating their own digital media players before spinning out Roku. They have gotten Netflix streaming into virtually every device out there.

I have great respect for Netflix and Hastings. Not long ago, I heavily praised Netflix for making many right moves to be as successful as they are.

Netflix’s biggest problem is not internal conflict between the DVD side of the business and the streaming side. Every battle in that realm has clearly gone toward the streaming side. Netflix management has made it very clear that it wants the DVD to go away.

But they need the content owners to cooperate for that to happen — and so far, there has been limited cooperation.

Content providers are more than happy to sell Netflix old library content that they have no meaningful way to monetize. (Some of which is of such low value that it’s not even worth pressing DVDs.)

Content providers are much less willing to give access to new release movies, HBO Original content like The Sopranos and other high-value content for which there are many other more lucrative markets.

On the DVD side, Netflix doesn’t need to seek permission from the content owners. Under the first sale doctrine, they can rent anything they can get their hands on. Even there, Netflix has voluntarily agreed to delay when it begins renting new-release DVDs in exchange for access to other content from the studios. (Presumably, if Qwikster were truly separate, then it would rent all new-release DVDs as soon as they came out. I bet that doesn’t happen.)

As much as content owners want the revenues that can be generated by Netflix’s 20+ million subscribers, they are worried about Netflix devaluing their content. At $7.99 a month for unlimited access, Netflix is cheaper than the price of a single movie ticket in many cities. Premium content providers don’t like that.

Even if Netflix were willing to pay more for the content than it charges subscribers, content providers wouldn’t play along. Let’s say for the sake of argument that Netflix were willing to pay $14.99 a month for content and could only charge subscribers $7.99 a month. This would generate a loss of $7 a month but the studios would get a lot more money. The studios are unlikely to participate because they want consumers to associate a higher price for their product than $7.99 a month.

This is similar to the Minimum Advertised Price concept in retail, where manufacturers set a minimum price that must be shown whenever their product is advertised. They want consumers to associate a certain value with their product and retailers advertising a lower price undercuts that. (If you’ve ever wondered why Amazon sometimes asks you to put an item in your cart before showing you the price, this is why.)

A similar thing happened with e-books. Amazon used to sell many Kindle books for a loss to promote the adoption of Kindle. With recent changes in the marketplace, the publishers are setting the price and Amazon gets a commission.

A related issue that content providers face is channel conflict. They sell essentially the same product to multiple channels: first-run theaters, second-run theaters, cable video-on-demand, hotel pay channel distributors, premium networks like HBO and Showtime, DVD, basic networks like AMC, Bravo and USA. This “windowing” strategy allows them to maximize revenues for a single piece of content.

In order to keep getting the high prices they get from cable VOD, they can’t sell new release rights to Netflix at low prices. If Netflix goes for $7.99 a month, HBO at $20 a month looks expensive. TimeWarner, which owns both studios and distribution, wants to protect HBOs price point. There are two ways to do that: get Netflix to raise its price or only sell mediocre or dated content to Netflix.

Netflix will have to raise the price of its streaming service in order to get high quality content. Apparently this was a sticking point in the recent re-negotiation with Starz. According to the Los Angeles Times, “Starz didn’t just want Netflix to pay more money for its content. It wanted Netflix consumers to pay more too.”

As much as many consumers hate the tiered model and expense of cable and satellite channels, that model has worked for decades and the entrenched players don’t feel the need to change that. Unless copyright law changes to force compulsory licensing of movies and television content (the odds of a truly entertaining Oscars broadcast are much higher), Netflix will have to play by the rules created by the content owners.

Splitting the DVD and streaming businesses does little to address any of these concerns. While other companies merge for synergies that rarely materialize, the DVD and streaming sides of Netflix are entirely complementary. The DVD side provides a fresh and deep library, while the streaming side provides instant access for when you just need something to watch right away. Recommendations take into account taste preferences regardless of the silly division between physical and digital media. Customer care, Web site development and other operations also have shared value.

I’m as big an advocate of the all-digital living room as anybody. I bought a DVR when they were selling for $1,000. I owned the first-generation Apple TV. If I had to pick between DVD and Netflix streaming today, it’d be no contest: DVD.

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May 22, 2011

Why Netflix is killing it — and what startups can learn from its success

Filed under: netflix, startups, television — Rakesh Agrawal @ 3:33 pm

Netflix just became the number one provider of subscription entertainment content in the United States, with 22.8 million subscribers. Comcast now comes in at number 2, with 22.76 million. And the trend lines indicate that Netflix will continue to grow.

In the process, Netflix has eviscerated Blockbuster and fought back an attempt at its space by Wal-Mart. Netflix shareholder returns far outpace Google, up 2800% since inception vs. 380% for Google.

How did Netflix do this?

Not getting too far ahead of the market. This is a mistake many entrepreneurs make — looking around at their needs and the needs of their friends and building for them. That’s great if your product is targeted at the Silicon Valley geek market. Not so much if you’re trying to reach the mass market.

Only 14 years later is Netflix offering streaming only plans in the U.S. But the dream has been there since the beginning. (The company isn’t called DVDFlix.) Reed Hastings was smart enough to realize that DVDs were an important transitional technology and Internet delivery wasn’t something that would work in 1997.

If you’re building a mobile product for small businesses and you require that everyone have an iPad, you’re asking too much. Think about whether you can accomplish your goals with email, SMS, voice or even fax.

Sharpness of focus. The market for video entertainment has a lot of players, each with its own twist. There is free content (YouTube, Vimeo), purchased movies and TV (Amazon, iTunes), ad-supported TV and movies (hulu, various network sites), new-release movies (cable pay-per-view), Redbox. Netflix could have gone in any of these directions and tried to compete aggressively for them. But it hasn’t. It has focused on a low-price subscription service featuring premium content.

That focus keeps the company from chasing every shiny new object — which has been the downfall of many startups.

Aggressive acquisition marketing. If there’s a better acquisition marketing company out there, I don’t know who it is. Netflix advertises across a variety of media, including search, online display, partnerships (e.g. airline miles programs), print, direct mail and TV. As successful as AOL was in the 1990s, Netflix is now. About the only thing they haven’t done is carpet bomb mailboxes with free DVDs.

A key to being successful at acquisition marketing is having tools to analyze performance by channel — key metrics like acquisition cost, ARPU, average customer lifetime and churn rate. If you know these numbers, you can make better media buying decisions and use that to grow your business.

Another important part of Netflix’s success is keeping the offer simple. If you haven’t done it recently, go through it. There aren’t six different plans to read and understand. Netflix picks a likely one and tries to get your credit card as fast as possible. The only plan-related question I found was “Do you want DVDs with that?” When faced with a lot of choices, many people will choose to do nothing at all.

Aggressive A/B testing. Netflix A/B tests everything, including pricing, features and user interface. I wrote about a Netflix test of its streaming only pricing before it was released as a new product.

Traditional methods of market research like focus groups and user surveys work OK if it costs you tens of millions of dollars to retool production lines. But they have many problems:

  • Users don’t always act like they think will act.
  • Some people will say what they think you want to hear.
  • Users are incredibly bad at estimating their own usage. (Every time I’ve asked users how many times a week they’d check movie listings, inevitably about 30% of them say they would check daily.)

In the online world, it’s easy enough to test variations based on real users. Let data, not egos, make decisions.

Not being held hostage by power users. Netflix hasn’t gotten as far it has without some controversy. Power users complained about issues such as throttling and deals that delayed availability of some new releases for 28 days. Many also complained about the removal of social features. There will always be requests for more features.

Yes, Netflix could have done things to placate these users. But those would be expensive and detrimental to the vast majority of Netflix customers.

The best example of a Web company that fell into this trap is Digg. A small cabal of users controlled the site experience. By the time Digg got around to fixing this, Twitter and Facebook had displaced it as a leading news source.

There is always the temptation to add power-user features under an “advanced” tab. Don’t do it. It will cost you in consumer confusion, team focus and support costs.

Relationships. Many in the technology world think that Hollywood is backwards and that all they have to do is build better technology. But that won’t matter without content to flow through that technology. Netflix, more than most companies in the space, has spent time building relationships with Hollywood.

Studios have learned from the mistakes of the music industry and haven’t been taking the sue-first-ask-questions-later approach. (Unless you’re egregiously stealing content.)

Unlike some in the industry, Reed doesn’t go around aggressively thumbing his nose at studios and cable companies.

Distribution everywhere. It’s getting harder and harder to find a consumer video device that doesn’t come with Netflix. You can get Netflix connected to your TV almost by accident. Blu-Ray players, video game consoles, dedicated media streamers, iPhones, Android phones, iPads, Internet-connected TVs. Even products from companies that are directly competitive with Netflix, including Apple and Google, offer Netflix streaming.

Consumers electronics is a notoriously low-margin business with a lot of risks. Netflix had a device team in-house, headed up by ReplayTV creator Anthony Wood. Staying on focus, Netflix never launched its own device. But they worked closely with Wood at Roku, who will sell you a box that streams Netflix for as little as $60. (See this deeper discussion on Roku.)

Instead of competing directly with consumer electronics giants like Sony, LG and Philips, they helped a company show how Netflix streaming could be done. And Netflix has managed to do this without expensive SiriusXM-type device giveaways.

Shaping demand. One thing that Netflix rarely gets credit for is the degree to which it can shape demand. Netflix has successfully changed the value proposition for Web video from “any movie, any time” to “something entertaining, any time”. This is a great 90% solution that results in lower costs and happier customers.

Looking for a movie that isn’t available on Netflix streaming but is on DVD? Netflix will suggest alternatives that you can watch right away. If you agree, Netflix just saved about 95 cents and you are happy because you found something to fill that time. In theory recommendations for streaming movies could be based on operational factors, with utilization-based content shown below content with an unlimited license.

Operational efficiency. Netflix spends about $600 million a year on postage. That number would be significantly higher if it weren’t for a recent invention called “Permit Reply Mail”. It’s a category of mail that I’ve only ever seen used for one purpose: returning DVDs.

In the Business Reply Mail category typically used for postage-paid mail, the recipient pays a premium because each returned mail piece needs to be accounted for. This arrangement works because only a small portion of direct mail gets returned. With Netflix, the return rate is close to 100%. With Permit Reply Mail, Netflix prepays the return postage.

The lesson for startups here is to work with your partners to figure out ways to reduce costs. There may be things that you could do easily that would eliminate a step that’s really hard and expensive for them or vice versa.

AOL offers an interesting comparison to Netflix. Neither company owned the content or the pipes that delivered the content*. But Netflix found a way to create experiences that strengthened its consumer relationships. At its peak in 2002, AOL had 26.7 million subscribers. As AOL’s paid subscribers asymptotes to zero, Netflix is poised to surpass the 26.7 million number before the end of the year.

* Technically, the combination of AOL and TimeWarner did also own content and distribution (at least within the Time Warner Cable footprint) but they never acted like one entity.

See also:

October 30, 2010

Netflix throws away the disc in the US

Filed under: netflix, television — Rakesh Agrawal @ 9:21 pm

Netflix is edging a step closer to its name with a test of streaming only service in the United States. The new offering allows users to purchase a net-only subscription for $7.99 a month. Adding DVD rentals is an option for an additional $2.00. This represents a $1.00 price increase from recent offers of $8.99 for unlimited streaming and unlimited DVD rentals with 1 DVD out at a time.

The online selection still lags its DVD catalog. That’s unlikely to change in the near future.

Netflix has been de-emphasizing DVDs lately. For good reason: streaming is much cheaper than postage. It costs roughly 5 cents to stream a movie vs. close to $1 per DVD rental. It has put a substantial emphasis on streaming, with Netflix capabilities embedded into dozens of devices, including Apple TV, Google TV, blu-ray players, iPads, iPhones, TVs and game consoles.

The company also recently entered the Canadian market with a CDN$7.99 streaming only plan with no option for DVDs.

H/T: Andrew Cooke on Quora

Netflix streaming only offer

Netflix streaming only offer

October 5, 2010

Apple and Google make their big push to TV screen

Filed under: apple, apple tv, google, hulu, television — Rakesh Agrawal @ 3:01 pm

This year has seen the biggest push yet to bring the Internet (or parts of it) to the biggest screen in the house. The newly revamped Apple TV started arriving in stores and homes last week. Logitech is announcing the details of its Revue Google TV box tomorrow. The boxee box is due in November. Roku has revamped its product line. TiVo is planning enhancements to its Premiere boxes. Prices are all over the map, from $60 for the cheapest Roku box to $500 + subscription fees for the most expensive TiVo. Capabilities vary dramatically.

It should be quite the battle at retail this holiday season.

Regardless of who sells the most boxes, these are the likely winners and losers in the overall entertainment ecosystem.

Winners:

  1. Netflix. Apple TV, Google TV, roku, Boxee, blu-ray and DVD players, networked TVs… Netflix is everywhere. In the last year, its stock is up 250%, compared with 51% for Apple and 8% for Google. Netflix recently reported that 61% of its customers had watched 15 minutes or more of streaming video online in the last month. Not only does that reduce distribution costs (the company spends $600 million a year on postage), it gives Netflix more leverage to negotiate distribution deals with studios. Netflix is already the number 3 video content distributor, beating out all but Comcast and DirecTV. With all of this additional distribution, I wouldn’t be surprised to see Netflix be the top video distributor in a few years.
  2. hulu. It could be a big beneficiary, but its ownership could keep this from happening. hulu’s network owners (NBC/Fox/Disney) seem conflicted on whether they want hulu to succeed. hulu integration is planned for roku and TiVo, but hulu has repeatedly blocked boxee. It will be interesting to see if hulu chooses to block Google TV’s browser.
  3. YouTube. As YouTube pushes more into longer videos and higher quality videos, it becomes more compelling to watch them on a big screen. A good 10′ interface would drive additional consumption.

Losers:

  1. Traditional media buyers. Ads today are sold by show, which serve as a proxy for demographics. e.g. ads on Grey’s Anatomy are targeted at young females. These will become more algorithmic and bought by individuals.
  2. Lesser cable channels. Some cable channels today only get distribution as part of bigger deals. For example, Disney may say if you want ESPN you have to carry the Ocho.
  3. Traditional pay-TV providers. Pressure to unbundle channels will increase. Making Web content easier to access will steal share of audience from traditional premium programming. On the plus side, it should drive additional demand for faster tiers of broadband.

May 24, 2010

Can Google cross the retail chasm with Google TV?

Filed under: apple, apple tv, google, television — Rakesh Agrawal @ 6:40 pm

Sony Dash at Best Buy

Last week, Google announced Google TV, a product that marries the Web with TV. It’s a product category that I’ve been excited about for several years.

But creating new product categories is hard. Retail is hard. Doing both together is really hard.

I was reminded of that today at Best Buy, where I saw a display for Sony’s Dash. As best as I can describe it, it’s a cross between an alarm clock, picture frame and MP3 player. Despite Best Buy having a real Dash, I still couldn’t try it out. The unit seemed to be glued to its stand. The screen said it was looking for a network, which it never found.

I then went over to check out Insignia GPS devices. The connected GPS unit sells for $199. Given that Insignia is Best Buy’s house brand, you’d figure it would get some decent promotion and training. I asked the blue shirt if there was a display unit. Nope. How much is the service? “I think it’s like $10 a month.” (The correct answer is $14.99 a month.) What’s the difference between it and the not connected unit that sells for $69? “I think it lets you connect to Google.”

Like Google TV, these are products that need to be experienced. They are either new products or significant (and premium-priced) variations on existing product categories. If people can’t try them or, at the very least, talk to someone who has in-depth knowledge about them, people won’t buy them. (As an early adopter, I probably will… but that’s not a huge market.)

Contrast this experience with the Apple Store in the same mall. There were two tables, each with about a dozen functioning iPads. You could pick up an iPad and play with it for as long as you wanted. There were employees available who knew the device and could answer questions. The biggest challenge? They were sold out of all but the 16GB WiFi iPad.

As I wrote before the first iPhone was released, Apple’s retail stores give it a huge leg up when it comes to introducing new product categories. The excitement that they create for product launches (read: free media), combined with the opportunity to experience new products is unmatched in retail. If Apple decides to make Apple TV more than a hobby, its store employees will play a big part in shaping user perception.

A big unknown is the price of Google TV. People might pay an extra $50 on a $800 TV for the Google brand, even if they’re not quite sure what it does. It’s unlikely that the price premium will be that small, given the cost of just the Intel Atom processors. I’d expect Google TV to add at least $100 to the price. The other big challenge is that a lot of people have recently replaced their TVs as a result of the digital TV transition. 65% of homes already have at least one HDTV, according to the Consumer Electronics Association.

A standalone box is going to to be an even harder sell to all but the geeks. The market is littered with unsuccessful standalone boxes from hard drive and networking gear manufacturers. They’ve all suffered from poor retail support and complexity of set up.

For Google to succeed, it will have to spend a lot more money on buyer education than it traditionally has.

See also:

More on: Google, television

January 12, 2009

6 ways a DVR is better than hulu

Filed under: consumer electronics, hulu, media, movies, television, video — Rakesh Agrawal @ 8:50 pm

I recently wrote 10 reasons why hulu is better than a DVR. Here are six advantages that DVRs have over hulu.

  1. You get higher quality video. If you have an HD source, chances are the video quality on your DVR will be much better. Hulu offers a very small selection (13 full episodes last I checked) of HD programming. Note that some local TV distributors charge extra for HD service. With AT&T u-Verse, the $15 for the DVR becomes $25 when you add HD.
  2. It’s designed for your living room. DVRs, despite the horrible UIs, were designed to be controlled from a distance and connected to your TV. It’s still only the geek set that will bother connecting their PCs to a TV for hulu. There’s hope though: Boxee is bringing hulu and other Internet video to a variety of platforms. A killer device would be a DVD player or game console that has boxee/hulu built in, similar to the LG blu-ray/Netflix player. (Boxee itself is based on XBMC Media Center, which runs on XBox.)
  3. It’s more network efficient. This isn’t a concern for most people today. But it may become one as incumbent TV providers wake up to the threat of Internet video. With a DVR, it doesn’t matter to the cable company how many people watch a show; the more the merrier. With hulu, every stream takes incremental bandwidth. Comcast is capping monthly bandwidth at 250 GB. It’s unlikely that ordinary Internet usage would come anywhere near that, but two or three people regularly watching hulu could hit that.
  4. You can record virtually anything. Although some DVRs restrict recording of some content (e.g. pay-per-view movies), the rule-of-thumb is that you can record whatever comes down the pipe. Hulu’s content comes from a select (though large) list of partners. You can’t, for example, watch ABC shows on hulu. Partners have Byzantine restrictions on when content appears. While many shows appear on hulu the day after broadcast, others appear eight days later. (House, Monk, Psych) I strongly suspect that this is because of Nielsen’s Live plus 7 TV ratings.
  5. You can keep what you record as long as you like. DVRs don’t generally expire content; as long you have free space you can keep it around. Or until you move and have to give the DVR back to the cable company. Most of the recent content on hulu expires within a few weeks.
  6. You can skip commercials.

I also came up with two more pluses for hulu:

  1. You get bite-sized content. Many of the shows I watch, such as talk shows or variety shows, are really collections of discrete elements. With hulu, I can get to just the parts I want easily. I don’t have to fast forward through the inane comedy bits to get to an interview I want to see.
  2. You get uncensored content. hulu offers content you won’t see on basic cable, such as scenes with nudity or bad language. (You must be logged in to see these.)

More on: hulu

January 2, 2009

10 ways hulu is better than a DVR

Filed under: consumer electronics, hulu, media, movies, television, video — Rakesh Agrawal @ 4:39 pm

I’ve been using a DVR for at least 8 years. I started off with a Replay 2020 and have since used other Replays, TiVos and cable company DVRs. Now my primary DVR is the whole home DVR that comes with AT&T’s u-Verse service.

DVRs have transformed the way I and many others watch TV. Besides breaking news and sports, I rarely watch live television.

But less than a decade after their inception (and before they’ve reached 50% penetration) they’re headed the way of the dodo, vinyl and cassette tape. The DVR’s kissing cousin — placeshifter Slingbox — will have an even shorter life.

The reason: Hulu. Here are 10 reasons why Hulu is better than a DVR:

  1. It’s free. DVRs typically cost $10-$15 a month for service. For a TiVo, add $150-$600 in hardware costs. Many people can use hulu to ditch their cable TV subscription altogether and save $60-$75 a month.
  2. You don’t have to program it. Sure, programming a DVR is a lot easier than programming a VCR. But it still takes work. And with 300+ channels, a lot of scrolling. Most DVR UIs are atrocious. While Web interfaces can make things easier, AT&T’s interface (powered by Yahoo! and recently redesigned) feels like Web 2004.
  3. You don’t have to manage it. A lot of the UI on a DVR is devoted to managing conflicts among recordings, managing recording space, etc. Many a user forum has been devoted to identifying the logic behind what gets recorded and deleted on DVRs. I just know that on my AT&T DVR, things don’t work the way I’d expect. (e.g. deleting programs I’ve watched before deleting programs I haven’t watched.)
  4. It’s infinite. You have access to thousands of TV shows and movies, way more than a DVR can hold. That’s only going to expand as programmers recognize the power of hulu and television on the Internet.
  5. You don’t have to know what you want to watch beforehand. If you hear about a program you’re interested in, you can go to Hulu and watch it.
  6. It has fewer ads. For many people, skipping ads is a big part of the appeal of a DVR. But it’s still a hassle. You have to pick up the remote at the right time and you usually end up watching 7-10 seconds of ads anyway because things don’t line up right. I’d rather sit through one 30 second ad. This isn’t bad for advertisers or TV networks either. (More on that later.)
  7. It helps you discover. Hulu recommends shows you might be interested in. Most DVRs don’t. (TiVo is a notable exception.)
  8. It’s social. You can share programs that you like with your friends on social networks.
  9. Your shows won’t be screwed up due to cable system outages, storms, power outages or a football game that goes long.
  10. It’s searchable. As a search geek, I’ve been impressed with the quality of Hulu’s search interface. They’ve made it easy to find content you want.

There are some advantages that DVRs have over hulu. I’ll write about those later. In the meantime, check out my list of ways to improve hulu.

December 29, 2008

A tale of two media companies

Filed under: google, hulu, journalism, newspapers, television, video, web 2, web 2.0, YouTube — Rakesh Agrawal @ 1:36 am

You’ve got a competitor with deep pockets, huge brand recognition and a lot of traffic that is interested in your content. What do you do?

Here are two very different approaches:

GateHouse Media is suing The New York Times Co., whose Boston Globe has been linking from its hyperlocal site to stories on GateHouse’s Wicked Local site.

Wicked awesome Hulu is co-opting archrival YouTube’s traffic. If you do a search for Simpsons clips on YouTube, you’re likely to see clips uploaded to YouTube by Hulu. Here’s one I found:

Rather than try to rewrite more than a decade of Web practices (if not copyright law), Hulu is working the system to reach a lot of interested users where they are. It’s a brilliant move and the kind of thinking that is virtually nonexistent within the newspaper industry.

The clip promotes Hulu as the destination for premium content on the Internet. Users have a clear choice: watch excerpts with an annoying Hulu ticker on YouTube or go to hulu.com where they can watch the full video in higher quality without the ticker.

In the short run, this helps Google by providing content for popular queries. In the long run, hulu is the big winner.

More on: hulu, newspapers, YouTube

September 21, 2008

Hulu might just make it after all

Filed under: google, hulu, media, television, video, YouTube — Rakesh Agrawal @ 1:14 am

If I could award an Emmy for outstanding performance in television, I’d have a clear winner: Hulu. The video site from NBC and Fox is my leading choice for product of the year. Hulu allows users to stream television shows from NBC, Fox, Comedy Central and select other networks. Most shows are available the day after they air on television. There is also a decent collection of classic television; I recently finished watching the first season of The Mary Tyler Moore Show. A small collection of movies rounds out the offering.

I wrote about Hulu when the partnership was announced last year:

The networks have many of the assets they need to deliver a compelling product — one much better than YouTube for copyrighted content. But I wouldn’t bet on it. And  I wouldn’t hold my breath on NBC and News Corp. making the summer launch date.

Although I was right about Hulu not making its launch date, I was wrong about its inability to deliver a compelling product. Unlike the music industry, which still refuses to acknowledge the turn of the century, the television networks have responded forcefully and credibly to the threat posed by YouTube.

Over the summer, I spent at least triple the time on Hulu as I did on YouTube. That will be even more skewed when the fall TV season kicks into high gear this week. The quality of the video is much better. Searching is also easier: unlike YouTube, you won’t see the same piece of content 12 times in search results. You also don’t have to weed through content that was taken down due to DMCA claims.

To be sure, there’s nothing truly innovative in Hulu. But the execution of what they do is great. The site is visually elegant and easy-to-use. You can subscribe to your favorite shows. You can embed videos on your blog. My favorite feature is the ability to create custom clips by dragging sliders.

Hulu does a good job (perhaps too good) of helping users discover content they might be interested in. There are some feeble attempts at social networking.

The networks are using Hulu to promote the fall season. Some shows, such as Knight Rider, were made available on Hulu before their television debuts to drum up interest.

Hulu is also doing some interesting things in advertising. More on that later.

As much as I like Hulu, I have a long wishlist:

  • Hulu on my TV. It’s hard to beat watching TV on a TV. A laptop display doesn’t cut it. Although my TV has a VGA input, that still means using the laptop to control playback. Hulu should seek to be on as many platforms as possible: Xbox, Tivo and Apple TV for starters.
  • Hulu on the go. There are times when I want to watch Hulu on my laptop. But those are also times when I’m disconnected — on a plane or a train. NBC offers downloads of many of its shows through NBC Direct; Hulu should do the same.
  • Local buffering of videos while watching. Unlike YouTube, you can’t buffer content. This deteriorates video playback quality by causing stuttering when you have inconsistent bandwidth. It also means that if you want to rewind, that video has to be restreamed. (This is more expensive for Hulu.) Even a two minute buffer would dramatically improve the experience.
  • More consistent content licensing. Hulu is at the mercy of its content providers for when content is made available and has to expire. Although many shows are available next day, shows like Monk and Psych are delayed eight days.
  • Fewer restrictions on embedded clips. Hulu clips expire along with the content, leaving holes in Web pages that embed videos. Although I wouldn’t expect full embeds to remain available, it would be nice to see exceptions for short clips.
  • Better descriptions in search results. “The Daily Show with Jon Stewart: Thu, Sep 18, 2008″ isn’t very helpful. The guest names should be included.

August 17, 2008

NYT pays tribute to the best fake political team in television

Filed under: journalism, media, television, video, YouTube — Rakesh Agrawal @ 4:19 pm
Jon Stewart on his first post-9/11 broadcast

Jon Stewart on his first post-9/11 broadcast

The New York Times ran a great profile of fake news purveyor Jon Stewart this weekend. According to a 2007 Pew poll, Stewart was tied with real newsmen Brian Williams, Tom Brokaw, Andersen Cooper and Dan Rather for #4 as the journalist they most admired.

The Daily Show is my go to source for television news. Stewart and his crew do a much better job than “real” journalists on calling politicians on their hypocrisy. The Times profile barely touches on Stewart’s agenda-setting effect; it isn’t uncommon to see hypocrisy exposed on his show get called out later in more traditional news shows.

Stewart is as tough, if not tougher, on journalists. His media criticism is often sharper than that of Washington Post media critic Howard Kurtz. (Kurtz frequently uses clips from The Daily Show on his CNN program Reliable Sources.)

The show has also changed my expectations of the late night talk show. I find that I’m disappointed when the interview segment is an actor, instead of an author or politician.

The Daily Show and The Colbert Report are ahead of many in the old media when it comes to presenting video content on the Web. After a slow start, this year’s upgrades to the Web site show that they really get the new world of audience interaction and content delivery. Full episodes of each show are available the day after broadcast. You can scroll back through previous episodes. Videos can be embedded on Web sites. Want to see that clip everyone is talking about? The search feature lets you easily find it. You can even find shows going back years. Unfortunately, there’s no way to get video from a specific date years ago.

The Times could learn from them. The nearly 3,000 word story includes two pictures and not a single video. The author describes a few segments, including an extended description of Stewart’s first post 9/11 broadcast, which scream for video. (The video is available on thedailyshow.com.)

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