Beware Hulu watchers: ‘The era of free TV is fast dying’

That was among the refreshingly candid gems we got last week from an NBC exec. He was beamed in from New York to enhance our case discussion about NBC’s decision on whether to buy the rights to Major League Baseball.

But what he really gave us was a wakeup call about the future of TV.

Get ready for Hulu (now an online service where you can watch many TV shows for free) to cost you money, perhaps a subscription fee. Get ready for your cable company to deny you high-speed if you don’t subscribe to cable too. And if you want to watch TV online, you’ll need a password from your cable company.

hulu-logo

Hulu: Free no more?

“We are resigned to letting people watch where they want to watch,” the exec said. “We just have to figure out how to monetize it.”

It’s not an easy nut to crack. Take Hulu, which has short commercials on its free online shows. NBC makes 20 cents per viewing of a TV show on Hulu. On TV, for the same show, they make 60 cents.

It’s that kind of gap that’s killing them – and not just them. Every old media platform is struggling with the same issue. How do we continue to fund the quality of programming/news/information that our customers want on the smaller returns that new digital platforms offer? So far, the math just isn’t working out in their favor.

I’m no stranger to dying media platforms (hello, my career in newspapers!). Which means I’m rooting for NBC and all the other media companies to figure something out. After many hours pondering this problem with scared and desperate journalists, I think part of the solution is to stop giving away the milk for (almost) free.

Media companies jumped online assuming that the same strategy they used on their old platform would work: We make content, businesses buy advertising, we make money. But they didn’t realize that online ads wouldn’t deliver the same fat revenues – or even enough revenue to cover the cost of making that content. So they gave away content without getting enough in return. And it’s killing them.

It’s time to figure out a way to shut off the free. Which is exactly what this NBC exec was talking about.

Almost everyone listening to him insisted they would never, ever pay for Hulu or any of the other services they’re used to getting for free. But I’m not so sure. I remember my parents telling me about how people were initially appalled by the idea of cable TV. Why would anyone pay for television?

Here’s hoping they can figure out how to make us pay for it again.

Advertisements

About missmba

What happens when a language-loving, mathphobic liberal arts major goes jumps on the MBA train. Follow my adventures at a top 20 business school.
This entry was posted in Budget and money, Communication, Media. Bookmark the permalink.

One Response to Beware Hulu watchers: ‘The era of free TV is fast dying’

  1. starbux says:

    a bad news for me definitely. anyway i also watch it at http://tvnuke.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s