Hulu’s plan for TV domination

7 Feb

Hulu-logoLet’s see if we can recall all the ways TV advertising was destined to fail.

  1. Remote controls will allow people to skip commercials by changing channels.
  2. The VCR make it too easy to fast forward through commercials.
  3. Subscription services like HBO make commercials irrelevant.
  4. The DVR make it too easy to skip commercials.
  5. The Internet makes television commercials irrelevant.

Did I miss any? And yet TV commercials continue to thrive. So will services like HULU be the death of commercials?

Hulu CEO Jason Kilar says no. But it may well kill off broadcast television, he says. And he may be right. Earlier this month Kilar fired off a treatise about the future of television. In it he asserted three truths:

  • There are too many ads on TV today. People will continue to find ways to skip those that annoy them.
  • People want TV content to be more convenient for them, when they want it and on whatever device they want it.
  • Viewers are far more powerful than any studio at deciding what shows are must-see-TV.

Armed with those insights, he argued that the future of TV looks more like HULU than NBC, ABC, or FOX (a bit awkward since NBC Universal, Disney and FOX are partner in the HULU venture). But his logic is solid.

First the explosion of video on demand services reinforces the value of consumer control. Layer that on top of the popularity of the DVR and you quickly get to a viewing public that doesn’t care when a show is aired, only when they have time to watch it.

The argument grows even stronger when you consider that half of Netflix’s 12 million subscribers use its streaming service and nearly one million people have signed up for HULU Plus’ paid premium service.

Next he turns to advertisers, the very bedrock of broadcast television and cable television. Here his argument is simple. Advertisers will spend more if they can be certain their ads are being seen by the right people. The key is less waste, which means relying less on vague demographics of who is watching each show.

And lastly there are the content creators. They want and deserve to be paid more for their investment, he says. That means cutting out the middleman deals where they license content to the networks. Not too surprisingly he foresees more deals like those that HULU strikes, some of the studio’s content is offered for free and the rest is offered as part of a subscription.

Kilar’s post offers all sorts of charts and graphs, but it doesn’t take lot of thought to see the wisdom of what he’s saying. It doesn’t unless you’re a network TV exec. Then you are feeling very threatened right now.

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