So, there is a tangled web of content owners, distribution partners, websites, employees, ad salesmen, actors and more that all have an interest in extracting the most value from their spot in the value chain.
Because traditional distribution (television) is still by far the most profitable (in that it provides the most revenue and cost per episode is basically a sunk cost), it certainly has a chance to influence where content is delivered. Ultimately though, the content owners should get to make the decisions. They are hopefully thinking about value per eyeball per episode in their decision making. Unfortunately, the OVERWHELMING majority of viewers will come from television. Online video sites would need to make a major case for substantially higher CPM for their viewing experience, which would probably be difficult to maintain if they were aiming to build for the 10-ft viewing experience (though with a wiimote or ipod touch as the remote, who knows!).
Hulu, as the leader (in my opinion) in the online video space, is going to be involved in probably every shitty thing that is going to happen as the content owners and distributors work to protect their legacy revenue streams/business models. This week, they removed their content from TV.com and asked to remove their content from Boxee. It's a major blow to the progress being made at the expense of cable companies, but that is how it's going to happen over, if I had to guess, the next 5 years (not to say that Hulu or Boxee will be around after that).
It just goes to show that being a web portal is not enough. There has to be some other differentiator. I think these guys need to focus on providing a superior interface, recommendation engine and innovative advertising model. It also makes me wonder who the ad sales guys are at Hulu. There really weren't that many ads from actual advertisers in there, in my experience. Obviously, they limit ads per show on purpose, but even the ads they have don't seem to be major advertisers. Maybe the low sales drove the content partners crazy? It's too bad really, because Boxee had potential to turn Hulu into the iTunes of streaming. Easy to use, slick interface with a deep library.
Well, if only Hulu had enough lobbying, we could have tried to use the stimulus to buy all the already laid cable/fiber in the US and nationalized the infrastructure, which would have created a real competitive environment. I have been meaning to research the history of the national highways, but I haven't yet (I'll opine anyway). I think the highways were once private, with a toll collector literally turning a pike (hence turnpike) to let people pass onto his road. At some point, we nationalized it (it's going the other direction now, but let's not think about that for now).
In the meantime, I have a suggestion for content owners. You made the choice to succumb to the large audiences that the cable companies can provide you. That is an understandable business decision. Just consider the impact of cableco provided DVR. People use DVR to skip ads, that costs you money. The cable companies provide these DVRs for super cheap. Maybe the case can be made (though I don't know the actual viewership figures) that you lose as much to people watching on DVR as they lose to people dropping cable in favor of Boxee. Not to mention how pissed off all the early-adopter, techies are. I hope you are putting pressure on them to build a channel like Hulu in the OnDemand section. In that channel, place unskippable ads or micropayments. Everybody wins (except maybe the Pirate Bay).
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