Can’t get digital tv? don’t worry, we’ve got Hulu now

Who needs digital TV when you can get your favourite shows free online? That is what Fox and NBC were probably thinking as they launched Hulu

Until a few days ago, Tuesday February 17 had been earmarked as the day when analogue television died in the US and digital TV would have the visual broadcast airwaves to itself. But late last year a growing chorus of voices started to call for a delay to the digital switchover plan.

The former Federal Communications Commission chair had insisted that the original plan would go ahead, but the new Obama administration realised that, in the middle of an already difficult start to getting the country back on its feet, millions of people waking up to blank TV screens was perhaps not the way to go. Congress eventually passed a bill to delay the digital switch deadline to June 12 and President Obama quickly signed it into law.

Part of the problem involved the US Government’s Digital TV Converter Box Coupon Program, an initiative offering eligible households a $40 (£28) coupon towards a digital converter. Millions claimed their coupons last year, but failed to redeem them despite public service announcements about the switch. Only after unredeemed coupons expire, after 90 days, can new ones be issued. With all the coupons handed out by the end of 2008, millions of people had to go on a waiting list for new coupons in January. No wonder the delay was necessary.

Even with the switch delayed, judging by the Coupon Program, it is likely that the US will still have millions of people whose TVs will go blank when the switch happens on June 12.

It is estimated that there is between 10 and 20 million households that will be affected by the digital switch because they don’t take paid-for cable or satellite TV services.

In addition to the many people who have somehow missed all the announcements, there are homes that will be unable to pick up a digital signal because its all-or-nothing quality can be blocked, for example, by large buildings, unlike “snowy” analogue signals. This is why some cable and satellite companies are hoping to pick up a few million new subscribers as those viewers’ TV sets go blank.

The new administration’s priority is an economic stimulus plan, which features a broadband element aimed at getting high-speed internet connections to every part of the US. That at least is what many supporters were hoping for, seeing as the new president has not only talked the talk when it comes to the internet but also walked the walk with his use of the web during the presidential campaign.

But some have already criticised the $7.2bn (£5bn) broadband stimulus as puny compared with the task of getting broadband everywhere in a country as big as the US. There are many who believe the free market will deliver broadband to everyone. Indeed, there are already many technological alternatives out there asides from the big phone companies AT&T and Verizon Communications or the cable TV companies.

Broadband and the future
Why is broadband so important? A good place to start to answer that question might be some of the biggest suppliers of broadband, the cable TV companies. Internally, some of these companies are already talking about how more people are watching video online and are wondering what this might mean for the future of their one-time monopoly business.

Time Warner Cable, the second largest US cable TV company and one of the largest broadband suppliers, said all cable and satellite TV companies need to pay attention to the future challenge of TV programming being available for free online.

“This whole economic ecosystem is dependent on subscription revenue and ad revenue. As cable networks put more content online for free, that will start eroding the subscription revenue source,” said Time Warner Cable chief executive Glenn Britt this month in a conference with Wall Street analysts.

“There isn’t a whole lot that we can do about that. And the reality is, we are starting to see cord-cutting where people, particularly young people, are saying ‘all I need is broadband. I don’t need video’.”

Many in the cable TV industry believe that Britt was simply pre-empting programming fee negotiations with cable TV networks, but some also acknowledge that, while he was speaking about the future, the future could already be here.

In the US, nowhere is the possible future of a web video-only world more evident than in the form of Hulu, a joint venture between News Corp’s Fox and NBC.

The web video service launched in 2007 with many top-rated shows, such as The Office, Family Guy and Saturday Night Live. Many industry cynics expected Hulu to fail like many other online ventures involving big media companies. But not only has it got praise for its “slickness”, it has also been steadily increasing viewer numbers, with more than 24.5 million unique users in December, making it the seventh most-visited video site in the US.

Attracting big advertisers
This is a far cry from YouTube’s 100 million users, but alongside its well-known TV shows, Hulu is attracting advertising from major advertisers from Toyota to McDonald’s, something that would be much more difficult for YouTube to do as so many of its millions of videos are uploaded by users.

How serious is Hulu about itself? Well, it had its first ad campaign during Super Bowl on February 1. The biggest TV audience in the US was told they should watch more TV on the web by Alec Baldwin with the comedic tagline: “Hulu: an evil plot to destroy the world. Enjoy”. Are you watching Mr Britt?While those 30-second Super Bowl slots cost some advertisers up to $3m (£2.1m), Hulu paid nothing because of credits it has earned through one parent NBC, which broadcast this year’s American Football extravaganza.

There’s a certain irony that this is happening on NBC, whose chief Jeff Zucker famously cautioned media companies and advertisers about the dangers of swapping analogue dollars for digital pennies. But at the same time, advertisers and marketers know they need to be where their audience is, particularly younger viewers.

And they have to pay attention – the Hulu ad was one of the more memorable from the Super Bowl according to some surveys. According to a USA Today survey, the most memorable was a Doritos ad made for $2,000 (£1,400) by two unemployed brothers from Indiana who entered a Doritos online contest called “Crash The Super Bowl”.

v Last month this column ended with advice to Super Bowl advertisers and broadcasters, happy to get paid in tough times, to take a risk and perhaps “look away now” if one or two ads got a tad too raunchy for regulators at the FCC. Some customers of Comcast in Tuscon, Arizona might have thought such advice was taken a little too literally as some of these viewers got an eyeful of pornography for nearly 30 seconds during the game. Comcast, the largest US cable TV company, has apologised and has enlisted the FBI in investigating the mishap and believes it might in fact have been sabotaged. 

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