Hulu get Boxee'd out [UPDATED]

There's been lots of hand-wringing about Hulu denying its online video programming to Boxee, whose software provides an appealing big-screen interface for shows delivered through the Internet, and to TV.com, CBS' competing online video portal. And because Hulu has given only terse public explanations, there's been a lot of speculation about its motives. I have my own guesses, but the thing that strikes me the most about this situation is how little it changes things online.

Boxee is impressive, yet there are numerous other companies offering ways to bring online video feeds to a TV set. These include hardware players such as Netgear, Neuros, Roku, Microsoft (the Xbox 360), Sony (the PlayStation 3) and, well, seemingly every TV manufacturer. So if Hulu was driven by its content suppliers to drop Boxee because of its compatibility with TV screens, that was a truly futile move.

That's the theory advanced by CNet's Greg Sandoval: the media companies that founded Hulu don't want to alienate the cable TV operators that account for far more revenue than the Web does. Meanwhile, according to the Wall Street Journal, Comcast and Time Warner Cable are seeking to put more cable programming online for subscribers only -- competing with the Boxees of the world by trying to make content scarce online, a strategy that has yet to work in the Internet era.

Hulu has said ...

... that its content providers asked it to dump Boxee, and that's something Hollywood typically does when it thinks a software platform is highly vulnerable to piracy. Boxee does include a Bit Torrent client, albeit one that has to be tweaked in order to find bootlegged videos. As Joshua Martin of Yankee Group noted, removing Hulu (and CBS' shows, which the Eye Network did separately) from Boxee will hardly help on the piracy front, if that was the networks' motive. Instead, the absence of legitimately sourced programs makes it more likely that people will download torrents of "Heroes," "24" and "CSI."

The other point worth noting here is that despite cutting off Boxee and TV.com, Hulu's programming continues to flow through MySpace.com, AOL, Sling.com, TVLoop, First on Mars and Mefeedia, if not more online video outlets. Kevin Chou, CEO of Watercooler Inc. (the company behind TVLoop), said Hulu has been a "very, very positive and encouraging" supplier. According to Chou, Hulu has embraced the superdistribution model, and it honestly seems enthusiastic about outlets that add new layers to the viewing experience, such as TVLoop's social-networking functions.

Hulu also makes its programs available through APIs to anyone who wants to embed them into a website. Boxee could go that route, but it's holding off while it continues talking to Hulu, spokesman Andrew Kippen said. "We're hopeful we can find a solution, but we definitely feel like we're being unfairly singled out. We're no different than your browser in terms of how we're getting the content."

Boxee has about 280,000 users, most of them on Macs, Apple TV set-tops and Linux computers. It recently offered a version of the software for Windows computers by invitation only; when the software becomes freely available, its numbers should swell. Kippen said a recent customer survey found that a stunning 80% were using Boxee to view online programs on a TV screen. One can only imagine what that number will be once Boxee strikes deals to put its software onto game consoles, Blu-ray disc players and other set-top boxes.

At any rate, whatever the reasons behind Hulu's recent moves, they're not appearing to have much impact on its overall distribution strategy. And that's a good thing -- Hulu and its network partners won't attract more viewers by making their content harder to find.

Corrected, 4 p.m.: A previous version of this post identified Boxee's spokesman as Andrew Kibben. The correct spelling is Kippen.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Comments

[Matt]

HULU's attempted blockade of Boxee has already been Broken ;)

http://lifehacker.com/5157615/how-to-reinstall-a-working-hulu-in-boxee

http://lifehacker.com/5157524/bring-hulu-back-to-boxee-and-xbmc

[Fanfoot]

Any insight into whether this is isolated or the ReQuest, PlayOn, Sling.com or maybe even Windows 7 Media Center will be next?

Seems like a bad time to assume that all of these guys are going to be fine. I wouldn't spend money on something like PlayOn right now until this shakes out.

[Joe Born]

Dead on analysis Jon, its effects likely wont be very great, but here's why, in my estimation, it happened. And lets remember that this is an extremely delicate dance that all the constituents are doing. Online video is very disruptive to the traditional distribution mechanisms. Comcast can claim all they want that online video is their friend, but it's only true if that delivery is on their terms. A few facts are pretty well established: "over the top" video delivered via the Internet is less profitable (when it's comcast delivered) and they can get cut out entirely if it's through another broadband provider, it gives them vastly less leverage and control, no share of ad revenue, etc.

What's going on in this industry is a very traditional dis-intermediation, except that one of the lower cost channels is also provided by them (and that they sponsor some content).

We don't need a crystal ball to see what happened here. Someone at the operators saw a mainstream press article suggesting that Boxee's interface is a credible replacement to the traditional set-top box (it can be operated with a remote, etc) and they hit the roof because it became entirely obvious that it's a real threat.

Internet video is a threat to the operators business models, there's little debate over that. To some extent they will participate with exclusive content and to a large extent they will fight it behind the scenes (pushing Hulu to ditch Boxee). It's old fashioned capitalism. But its imperative that the media call them out on it. Don't let them claim this is about protecting content or the studios when there have been no reports whatsoever of content leaks from Hulu or the like. There's an excellent report on fastcompany.com about this and a response from Comcast, but read between the lines and you'll see it confirms what's already obvious:Entrenched interests fight threats to their business, lets' not let them claim its anything other than self-interest.

http://www.fastcompany.com/blog/kit-eaton/technomix/will-cable-tv-move-internet-transmission-model

If the operators win, it's not just Boxee that suffers, it's an entire generation of Internet TV entrepreneurs and innovators, and it's viewers too who won't benefit from those innovations.

Full disclosure, I have a stake in this game, my company makes a box that connects the Internet to the TV, supports Boxee and benefits from "over the top" Internet video

[Phil Leigh]

Fox and NBC shall learn that there will be two consequences to this action.

First, consumers will discover that laptop computers and flat-panel TVs have common connection sockets. Once mated the TV acts as a giant monitor for the laptop and the computer functions as a Media Controller for the TV. The laptop’s on-board WiFi links to a home network and thence to the Internet. This provides unlimited access to Internet Videos, including Hulu, on the TV screen. Given a remote mouse and keyboard the consumer gets a comfortable lean-back viewing experience 15 – 20 distant from the TV screen.

Contrary to received wisdom, the Laptop-as-Media-Controller is not “geeky” as demonstrated by this video. Fox and NBC will learn that anyone who knows how to use a Browser can get Hulu on the TV screen. Although, Boxee is not technically a Browser, it is being used as one with a simplified interface. Since nearly every computer user knows how to use a Browser, Fox and NBC have shot-themselves-in-the-foot by banning Boxee.

Second, once the Laptop-as-Media-Controller is set-up, there’s nothing to stop users from downloading pirated copies of TV shows and movies to watch on their TVs. Unfortunately, the pirated files normally have the commercials stripped-out.

Recommendations

Fox and NBC can instead focus on finding ways to generate revenues from Internet Video that are unavailable in conventional television. For example, Hulu can be more creative with interactive advertising instead of the pre-post-and-mid-rolls that dominate presently. Companies like YuMe Networks enable such interactivity. They not only enhance ad revenues, but can execute purchase transactions with the viewer.

This is Third Generation Television.

http://www.insidedigitalmedia.com

[Matthew Hinkley]

This is really a shame. I own a VUDU Box and am really hoping that they integrate with HULU sometime soon. The VUDU Box already gets YouTube, which is really neat to watch in HD via my television. I love the box for the instant HD movies and selection, but HULU will really add another dimension.

I believe HULU will really need to expand to devices such as VUDU, Netflix, and even Xbox to succeed.

[Jake Marsh]

There's already a working replacement for Hulu on Boxee right here: http://thejakemarsh.com/1808/