Boxee: The Networks' Biggest Threat
Fascinating story about Hulu and Boxee here. As usual, I’ll voice my dissenting opinion and say that Hulu is doing the right thing.
Boxee, for those who don’t know, is a service that aggregates certain video from all around the web into one media center-like experience. It’s sort of like having a TiVo that has (at least until Friday) unlimited access to lots of top quality content, and minus all the useless crap that comprises the majority of content on other video sites.
Content owners, like Hulu, generally found this less objectionable (or so the theory went) than simply stealing the content, since Boxee preserved any advertisements within it. It acted more like an RSS reader than the good old pirate-laden days of YouTube.
It’s tempting to pass Hulu’s request off as old media dinosaurs not understanding new technology, but Hulu itself (a joint venture between two of them) seems to disprove that. That site is a damn near perfect mixture of old media and new delivery methods. If NBC and especially Fox seem to get it, and if they are objecting, there’s a reason. They must fear something happening if services like Boxee are allowed to grow.
There are a few obvious disadvantages to Boxee for Hulu. They lose the ability to run display ads alongside content, which they don’t seem to do yet anyway, but may one day. And, perhaps more importantly, they lose the ability to track people around the web using standard browser cookies (which presumably don’t work on Boxee since it isn’t in a browser) which can be used to target ads and increase revenue rates.
But all of that still might not be enough for them to feel the need to pull the plug. My theory is that they fear Boxee growing large and offering an end-run around the networks for content producers. They’re already pissed that YouTube got as big as it did, almost entirely due to their content, but YouTube is at least too mired in music videos and losers screaming “Leave Britney alone!” into webcams to pose a serious threat to the networks. They’re just not where you turn for high quality content.
Not so with Boxee, they’re playing Facebook to YouTube’s MySpace. They’re building the endless TiVo, with dozens of hand-picked, high-quality channels, and one they plan on integrating with existing hardware like televisions and DVRs and gaming consoles. They will, if they’re successful, deliver professionally-produced content to millions of people.
From the networks’ standpoint, that’s not a good thing. It shifts the balance of power. Currently if a Hollywood producer decides to make a television show, he’s got only a few major networks and a handful of cable ones (most of which are owned by the same companies as the majors) to shop it around to. Put Boxee in a few successful TVs and DVRs, and you’ve got a viable new network right there. Put them in 100 million homes and computers and you’ve got a monster.
The networks are nothing more than a middleman between the people who make content and the ones who consume it, and they know it. And like all middlemen, they lie awake at night hoping the people on the ends don’t find a way to cut them out. The relatively slow bandwidth in most of the first world and the lack, until recently, of internet-connected hardware attached to televisions has relegated online video to little more than kittens on treadmills, but the writing is on the wall.
Hulu is the networks’ best chance to keep control of the middle ground, and Boxee is a direct threat to that. Their streaming hundreds of thousands of Hulu videos per week seems like a gift right now, but it’s a Trojan horse and the networks know it.
I expect we’ll be seeing a lot more from Hulu in the future. They’ll be in all of the same places Boxee wants to end up. In your TV, on your Wii and iPhone. Removing their content from Boxee is the first salvo in the battle to retain control of the middle ground, and one they have to win to ensure their survival.
February 18, 2009 at 8:36 pm
great post and thanks for the link!
February 18, 2009 at 9:12 pm
excellent article. you are spot on. adding you to my reader now.
February 18, 2009 at 10:55 pm
I agree with you completely. One single good service loses too much from aggregation.
February 19, 2009 at 3:02 am
hit the nail on the head!
February 19, 2009 at 10:38 am
You know how networks operate don't you? They sell exclusive rights to broadcast their content in a particular area. The local affiliates are upset enough about network content being available on the interweb but being a part of putting that content up on someone's tv screen would have them screaming (and quite possibly break affiliate contracts). Don't hold your breath on Hulu appearing on your TV set.
February 21, 2009 at 7:03 pm
[...] « Boxee: The Networks’ Biggest Threat [...]
February 23, 2009 at 7:52 pm
Why do you only post the comments from people on your johnson? Maybe a better question is: Why do you write comments yourself, appearing to be others who are on your johnson?
March 12, 2009 at 11:32 am
HI Matt,
Just stumbled along your blog following this Hulu-Boxee story – nice blog.
I'd only amend one thing that seems a misconception: “The networks are nothing more than a middleman between the people who make content and the ones who consume it, and they know it”
In fact, networks are the ones who frequently develop and commission projects – they hire talent and production companies to execute these projects. Sure, they also get tons of pitches from third parties but even these become collaborative to try and improve them so folks will watch.
So I think that without networks, there won't be as much of virginal unimpeded production as think (waht we'll have is production along the lines of kittens on treadmills as you say.)
March 12, 2009 at 12:40 pm
They do fulfill sort of a VC-type role too I suppose. I think there's a good chance that that aspect would be replaceable though.
March 12, 2009 at 1:05 pm
But I'm saying its more than a VC role – the VCs don't have the original concept. They seek out the inventor (or visa versa) and give money/advice. I'm saying that the network is often the inventor, not just the funder.
Think the best real world example is how even with the amazingness of how net has improved access to music on a whole, it still hasn't created or broken a big artist. Think the only “big” artist from the Net has been Lily Allen (and she's with a major label.) No independent Net-born artist has gone on to radio or sales success (I'm excluding established artists who sell on the net like Radiohead and NIN.) We denigrate big media but they have a unique view into what their customers will buy/watch/listen to.