Dear Hulu: You Have a Problem

Dear Hulu:

I’m intervening because I care.  We’ve had some good times together, but if you continue down the road you’re on, you are going to die.

What am I talking about?  I think you know.  I’m talking about your asinine leadership, including such figures as Chase “Diarreah of the Mouth” Carey and Rupert “I Lost $4.3 Billion This Year” Murdoch.

These people are not helping you, Hulu.  These people are hurting you.

Maybe even killing you.

See, people like Carey and Murdoch come from the “old school” approach to media.  They think that consumers should be forced to double- and triple-pay for all media they consume.  It’s not enough that consumers sit through commercials.  They should also pay for a subscription service like cable or satellite (unless they settle for OTA, of course).  On top of that, dedicated fans should pay AGAIN for a copy of these shows on DVD or Blu-Ray.  Murdoch and Carey think that’s still not enough, because they now want to charge you for watching shows online as well.  Last I count, if you really enjoy a show you should pay for it at least four times – and that’s not including if you want the show on a portable device like an iPod or smartphone.

You know what’s so great about you, Hulu?  You haven’t been this way.  You’ve given people the opportunity to enjoy shows over and over and over again by only paying for them ONCE (via advertising).  What a novel concept – allowing people to enjoy shows from almost any internet-connected device, and recouping your cost via advertising.

This concept reminds me of another company you may have heard of.  Its name is Google.  Google’s market cap is currently over $170 billion dollars.  Has Google achieved phenomenal success by shifting its burden of cost to consumers via subscriptions?

Absolutely not.  Google provides consumers with free services (search, Gmail, Google Maps, YouTube, Google Docs, Chrome) then subsidizes those free services with ad revenue.  $170 billion dollars later, consumers possess a plethora of free and useful tools, advertisers have the most targeted ad venue ever created, and Google becomes the most powerful online entity in the world.

Compare this to all the multibillion-dollar online companies that recoup costs through subscription models.

…Oh.  Wait.  How many multibillion-dollar online companies do that successfully?

That’s right.  Zero.

Now this is not to say that premium subscription services cannot work, because they can.  (Although many other companies have tried that and failed.)  If you wanted to offer, say, 1080p streaming for a premium price, that would be okay with me and most of your other users.

But the key with premium services is to actually provide premium offerings.  If you attempt to take something that has been free (e.g. everything up to this point) and suddenly start charging for it, you will lose viewers.  Tons of viewers.  Maybe all of ’em.  Imagine if Google started charging you a monthly fee to use your Gmail account.  Imagine if Facebook started charging every time you checked your “wall.”

It’ll never happen, because these companies aren’t moronic.  But Hulu, your board of directors…

…Let’s just say I’m not as sure about them.

I want this to be more than just an angry rant, so let me share some concrete ideas on how you can increase profitability without alienating your entire userbase.

  1. Improve international offerings. Do you have any idea how popular you could be if you became less U.S.-centric?  Even if your shows remained available only in English, you could easily increase viewership by an entire order of magnitude through an improved international presence.
  2. More stand-alone software clients. Your recent desktop Linux client was a great move.  A PS3 client would be even better.  Clients for mobile OSes?  Pure gold.
  3. Start cross-selling DVD versions of shows, and consider partnering with Amazon or iTunes for downloadable sales. If someone is watching back episodes of “The Office” and loving every minute of it, why not sell them a DVD box set right there?
  4. Convince CBS and other leery networks to sign up. I’d love some online Big Bang Theory, so help CBS realize that they make more money off me watching BBT on your site than they do when I DVR the show and watch it commercial-free over and over and over again.

If you try all four of these ideas and none work, then consider some kind of paid premium offering.  Just don’t jump straight to a subscription model, because it makes no sense.

Sorry for being so bold, but I like you, Hulu.  I want you to succeed.

But facts are facts, and let’s face it – your competitors are only getting stronger.  YouTube is already offering ad-supported movie servicesCrackle is getting better, even if it remains U.S.-only.  Netflix’s Instant Watch offers most of what you do PLUS the ability to get my HD fix via Blu-ray.

So to try and switch to a subscription model amidst all this competition is nothing short of suicide.

I want better for you.

I recently joined many others in canceling my cable service because I have better places to send $75 a month.  First thing I did was buy a $20 antenna that gets me all the major TV stations (in hi-def).  This, combined with Linux’s MythTV and a digital tuner card, gives me a great HD-DVR.  Netflix and you fill in the rest of the gaps, and with all the leftover money I can buy every show I’ve ever enjoyed on DVD or Blu-ray.

Lots of people have left cable and dish behind because of services like yours, Hulu.  With the economy in the state it’s in, you can bet that many more people will take this leap in the near future.

So the question becomes – when these millions of viewers look to online viewing offerings, are they going to pick the free YouTube, the less-shows-but-free Crackle, or the as-good-as-you-plus-physical-media Netflix?

You fill a niche that no other site currently fills, and you are throwing away years of progress if you move to a subscription-only model.  Let NetFlix fill that niche.  It already does it much better than you could because of its pairing with rental services.

I’m here to help, Hulu.  Don’t make me leave you.

Because if you become “subscription only,” I will.