communication is essential to business making and it involves more than the ability to name your product, write a tag line or a press release. It's an intricate, rational and scalable effort and, let's face it, not anyone can do it.

5/03/2008

TV online - I don't get it


I got all afluster with reading about Hulu (more here) and thinking how cool this may be if all the nice series I need to download off "legally-challenged" sources online would be free to view anytime and everywhere.

But the more I think about it the more two things nag at my logic.

1. It's a free website supported by syndication deals and advertising: soooo basically they make money the same way they do on TV by placing ads between shows or, as luck would have it, above and below the small screen on your computer screen.
True, there's only three ads/an episode but this begs the question HOW DO THEY SUPPORT THE PREMIUM CONTENT they brag about?
Because common sense says this: you have a script writer that writes a brill script. Cue money for that. Then you have Angelina and her kids and more money for her to play the script. Then you have the sound, light, props, nails etc etc etc people. Cue more money to make the script look good. Then you have equipment. So basically there's a lot of money needed to make a show. So when you sell it to a network, you need to sell it for a lot and the only way the network will get its money back is by putting a lot of ads in between the seconds of the show.

Now if the show goes online for free, and can only have 3 ads and 2 banners as it is being watched, the normal question is where does the money come from?

Truth is, there can only be one of two explanations: networks are trying real hard to deal with online and this is their silly way of doing it at the risk of losing huge money. Two, the shows will only be reruns or oldies but goldies which you might want to re-watch, in which case Hulu is really a threat to the DVD industry but not to the online revolution.

2. Why would two networks be kind enough to allow Hulu to search other networks' content if they did not have it on their website? Isn't this counterproductive to them working really hard to get exclusive content?
This smells like branded utility to me but I fear that in matters of "big bucks", branded utility may be the little hole that sunk the big ship. For two reasons:
- when you create an aggregator for content you need to treat all content the same which makes promoting and selling "better" advertising for your content almost impossible
- networks base some of their negotiation power on pure "cojones" driven by having owned best-selling formats which they syndicate at huge costs. When you support competitors' content also you are either sure you are the best or just plain dumb.

an interesting article on this here and also check wikipedia for Hulu (name by Interbrand) but if someone has the answer already please share

5 comments:

dragos said...

it's not that difficult: the online show's life cycle becomes much higher since it is available more than a run plus a couple of reruns, as in the tv's case. as such the 2-3-4-5 banners/ads/prerolls can be viewed many more times in a larger timespan (think long tail if you want)

then, hulu is a jv between the very two networks providing the shows - as such it's somehow normal to have a one and only platfrom for content consumption while using their own websites as a communication tool.

not sure what brand utility is or how it fits into the picture - perhaps a definition for us (or just me, a mere mortal) would help define concepts. however, somehow i kinda doubt that hulu was a result of a brand utility strategy :-) it was a simple investment opportunity leveraging the internet

Bogdana said...

I tend to agree with you up to a point. the thing is the advertisers are not interested in placing adverts with a longer lifetime but rather in placing adverts with what is NOW popular so as to reach as much market with exponentially as little effort. I can see your point if we think of targeting (which seems to be the strong point of internet so far) meaning that you customize your communication to fit the viewers of, say, the vintage series of Buffy the Vampire Slayer. But in big bucks' thinking, you would want your ad to run during the Super Bowl and not during the rerun. The thing is that everyone seems to believe this would equal TV in importance and it seems to me it does not. if it's just a way to harness some additional revenue from online [by taking it away from illegal providers] fair deal, but the buzz was waaaay more exciting. and as one COO from NBC said "if this is just another way to watch TV, i'll slit my wrists"

branded utility explained here http://bogdanatheplanner.blogspot.com/2008/02/about-branded-utility.html :-)

dragos said...

all fine and dandy but i think you have a wrong assumption: hulu does not mean or involve live television. as such, concepts such as primetime are not as important and "now popular" can as well mean a month, a few months or a year (think friends or southpark, or seinfeld etc). fashionable might be a more appropriate word methinks.

btw, hulu is legit and so is its content. afaik it is still a marginal source of revenue but which in time may (or may not) become a relevantone. the big (advertising) bucks usually swing where the audience is and the audience seems to be on the internet more and more than on tv.

as for the branded utility your ppt is kinda frugal but got wikipedia to the rescue :D

Bogdana said...

okay. I'll bite. legit however seems to be the lamest of reasons especially for the Internet, where with minimal alterations anything can be branded as creative license content and viewed as such without restrictions. Plus I think people have not, nor will ever grow to believe that torrents are bad because they make Angelina poor. and I think audiences are NOT on the Internet but rather are ALSO on the internet when they are not on TV. I am not speaking here about time of interaction with the two mediums which is BTW very different (people are known to run TVs even as they surf the net which in Nielsen terms counts as watching - stupid i know but hey)...I am speaking of something powerful enough to switch audiences to the Internet completely. this only cannibalizes existing audiences. and still I don't see how they can make up for the lost revenue on TV by the limited revenue online - it's 3 (THREE) ads an episode!!! Compare with an approximate 30 on TV. if they put a a margin of 100% on the online ads they won't be able to sell; the frame of mind is still not there - not even in the west. people are not prepared to pay more than TV for online...

ppt was meant to be accompanied by my exciting presence :P but I guess I will never beat wikipedia

dragos said...

nu ne-ntelegem. :-) te scot la o cafea