Hulu shifting to model where subscribers must prove they also subscribe to pay-cable

[Deberg_1990]

Trying to stop the bleeding and kill the cord cutters......Thoughts?



http://www.forbes.com/sites/thestree...-on-consumers/



I must preface this article by saying, the following rumor comes from the NY Post.

That said, the newspaper has been right before. Even if they’re not, the report the newspaper published over the weekend holds considerable meaning for investors in and observers of the media space.

The Post claims that Hulu plans to shift to a model where subscribers to the online streaming service must prove that they also subscribe to pay-cable or satellite television. According to the report, this is one factor that led to Providence Equity Partners’ decision to sell its stake in Hulu to majority owners News Corp. (NWSA), Disney (DIS) and Comcast (CMCSA).

If this happens, it only cements my contention that content owners call the shots, leaving middlemen such as Netflix (NFLX) flapping in the breeze. Just the threat of it happening is enough to let Netflix and even Apple (AAPL), who reportedly has streaming content ambitions, know who is boss.

The knee-jerk reaction to this news: Consumers will just ditch Hulu and go to other streaming services for their content. While they might reject Hulu, they’re not going to be able to find content quite as a fresh on any other free or inexpensive service or one that does not require some sort of cable or satellite subscription.

Fair or not, the old guard that controls Hulu (and the old guard in general) has companies like Netflix as well as consumers right where they want them. Why? Because they own and control the content. They can effectively make you pay twice to access that content via two mediums that have, for all intents and purposes, become one and the same — TV and Internet.

And, as Stacey Higginbotham notes over at Gigaom, Washington does not appear ready to challenge this type of move if Hulu makes it:

“Instead of understanding what that convergence meant for the economics of old and new industries and what regulations might be needed to avoid protectionist behavior by pay TV providers and broadcasters, [a recent Senate hearing dealt] more with discussions around reworking the Telecommunications Act of 1996 for the current era.

Couple this with recent TV Everywhere deals between companies like Disney and Comcast and reports of more to come (the Post says Fox is in talks with Comcast on a similar deal) and the future looks bleak for Netflix as well as consumers who would like to cut the cord and still watch quality programming. Bottom line, the old guard is just not going to give you premium programming for the cost of a standalone streaming subscription.

As things evolve you can stream all of the old and stale scraps you want at places like Netflix, but if you want anything resembling fresh content, you’ll need to pay more via on-demand offerings through outlets such as cable, satellite or iTunes.

Consider the deal Disney announced. It opened ESPN programming up to mobile devices, but only to customers of Verizon (VZ), Time Warner Cable (TWC) and Bright House Networks. That hook up went down last year and the government has not voiced any objection that I know of. And, of course, Time Warner (TWX) only allows HBO subscribers to access HBO GO.

It gets even better for the old guard content owners and worse for glorified bootleggers like Netflix. If the old guard faces any consumer protection-related regulatory pressure, it can quickly and easily concede. While they might have to toss cable and satellite providers under the bus, the outcome of government intervention likely will not benefit companies such as Netflix.

If Washington forces the old guard to open up digital delivery of its programming to nonsubscribers of cable and satellite, it can do it via its own platforms, whether that’s Hulu or some TV Everywhere effort. As I have been saying for the last year, that’s long overdue – a tier-based subscription service supported by advertising where content owners and deliverers share revenue.

There’s a reason why I am long stocks like TWX, Viacom (VIAB), Madison Square Garden (MSG), Rogers Communication (RCI) and BCE, Inc. (BCE). They own or control premium content and, in many cases, they share or have complete control over the mode(s) of delivery for that content.

In this regard, they have power over Netflix and even stronger companies like Apple, Google (GOOG) and Amazon.com (AMZN).

[WhitiE]

Guess I won't be cutting my cable....

[the Talking Can]

goodby hulu and roku

[htismaqe]

My DirecTV contract is up in July and I was considering getting a Roku instead.

I'm tired of them jacking up my price. They've got it all figured out, just like the cable companies and cell phone companies. Churn is GOOD. Give the world to get customers, do nothing to keep them. For every person that disconnects, 5 are too apathetic or have no other option and pay the higher prices instead.

I'm tired of my $75 cable or satellite bill being $175 by year 3.

[Demonpenz]

Good

[007]

If this rumor proves to be true... ****'em

I was actually considering signing up to their pay service but I'll wait and see what comes of this now.

[Bump]

I thought that their pay service was completely worthless, so I cancelled after 1 month of trying it out. What a joke.

[007]

Originally Posted by Bump

I thought that their pay service was completely worthless, so I cancelled after 1 month of trying it out. What a joke.

It is crap that they are looking to cut out the cord cutters. god forbid we are tired of all the ridiculous rates.

[007]

What is real annoying is all the deals being made with providers that are not in every market.

[mnchiefsguy]

Originally Posted by Demonpenz

Good

Not sure how gouging the customer is a good thing. In the end, Hulu will fold after losing tons of their subscribers, and the customer loses because they have one less entertainment option.

[L.A. Chieffan]

Just torrent everything. Done.

[SnakeXJones]

Hulu is terrible anyway

[BigMeatballDave]

Originally Posted by the Talking Can

goodby hulu and roku

There is still Netflix.

[BigMeatballDave]

I've never used Hulu because I'm not paying them to watch commercials.

[lcarus]

Originally Posted by L.A.Chieffan

Just torrent everything. Done.

Good plan. If I miss an episode of House, I just torrent it. Even sometimes if I have it on my DVR, I'll torrent it at work just because I'm impatient. It's also really nice to have all the commercials cut out for you. I'm gonna fast forward through them all anyway.

I also don't have a problem with downloading torrents of movies. I never bought movies before seeing them anyway in the past, so they aren't losing money. I'd always borrow movies from a friend or my family, or occasionally rent from a video store or Redbox. If anything, some movies I've downloaded I ended up buying on blu-ray if I really liked them. In fact, I own about 30 blu-rays and I'd say a large portion of them I initially viewed through downloading.