HULU's Boxee'ng Match
Andy Tarczon, Founding Partner
February 20, 2009
By now many of you have caught the uproar surrounding HULU’s efforts to pull their content from Boxee and TV.com. This happened at the request of the content providers supplying content to HULU.
A couple weeks ago, I was talking to an unnamed content provider who wholeheartedly stated that the Internet would become a required platform for content delivery. However, as they listed 13 reasons it would fail, it became clear that providers would do everything in their power to stop such a move. Why?
The heart of the matter is that Cord Cutters scare content providers. Here’s a simple consideration content providers don't want to talk about: viewers via the internet are far more valuable on a per eyeball basis than those via the TV. The caveat, however, is that the volume is so low that the revenue will not replace their existing revenue. It is merely ancillary revenue. Core revenue is still based upon good old-fashioned subscribers, revenue based on monthly subscriptions and local broadcast deals. So when HULU content makes its way to the TV, content providers get nervous.
This leaves HULU is in a difficult position. They want to be the consumer brand of internet video, unlike other players such as Move Networks which are after technology plays (as we highlighted in our recent interview with John Edwards). However, Boxee lets HULU compete against their content providers’ main revenue source and that has heads turning.
Does Boxee really create such a threat? Only by the highly vocal cast of their loyal users. I have to admit to being confused by the whole Boxee phenomena. At CES, I met with Avner Rosnen, CEO of Boxee, and have since tested the Boxee alpha on the PC. Avner's users are avid - nay rabid - fans, but the concern is that I can’t see a path for Boxee’s long-term success. While I personally like the product, Boxee hasn't shown a long-term revenue stream.
And at the end of the day, revenue streams are what it is all about.
ShareThis