The Crazy Hulu Model?

I don’t subscribe to cable or satellite television but I do still enjoy watching forms of video entertainment, primarily through the streaming of online content (though I also still utilize the physical DVDs I get from Netflix).  All that being said I am quite fond with Hulu.  There are a lot of shows I have found enjoyment in watching, but I, like TechCrunch’s Jason Kincaid, think that the current episode availability on Hulu is kind of crazy.

Here is my question about the fact that some shows only allow you to watch a few select episodes, possibly from a random season, on Hulu at any time; does this current system really benefit anybody?  I am certain that there are people who think it is beneficial — in the hopes that it will encourage users to buy DVDs — but for some reason I think this is misguided.  Here is why:

Every time I watch an episode of some show on Hulu I encounter a couple of brief commercial breaks throughout.  My assumption is that Hulu makes a portion of profit off of showing these commercials and that the owning company of the content makes a degree of profit (likely the larger degree).  So let’s assume I decide to watch a whole season of a television show on Hulu, this would mean that each episode I watch is creating some degree of profit for both Hulu and the content owner company through the advertisements which are shown.  Now, if the content of a television show is limited to say only five episodes from a random season (also often dispersed in the middle of seasons) then it is only those episodes that Hulu and content owner company can make profits from my advertisement exposure.  Now if I have been following the show along successfully all along then this might be fine, because I would just watch the new episode when it comes up.  But say it is a show, like “Rescue Me” (as mentioned in Mr. Kincaid’s article), which I have not seen from the start.  At this point if I want to get into “Rescue Me” I am forced to turn to DVD content.  So will I go buy the separate seasons?  Not at all!  As I mentioned above, I use Netflix.  If Netfix doesn’t have a TV serious on its “Watch Instantly” (which actually I think “Rescue Me” is on this option) then I will add the season DVDs to my queue.  Now I pay about $15 a month for Netflix to get two DVDs at a time and can easily get through an entire season (if not more) of a television show in that time.  Now surely the content ownership company makes some money off of Netflix as well (hence the fee).  I have seen very few television season DVDs that cost less than $15 (most are quite a bit more) so isn’t the content ownership company loosing out when I go to Netflix, rent the DVDs, watch the episodes commercial free, and make some good progress on the a series which I am interested with?  However, if the whole series was available on Hulu I might be willing to watch it there, even considering the limited commercials, so as to keep my Netflix queue open for other DVDs.  if I was watching episodes on Hulu, the content ownership would be making money on every episode I watch instead of the nominal that I contribute in a month to Netflix.  Furthermore, If I hadn’t been keeping up with a series, I might be willing to go back and re-watch an episode or two on Hulu, thus giving more advertising time and money to the content ownership companies.  It just seems like Hulu would offer the better investment for the content ownership from a viewer like me.

Now, I will fully admit that I am likely missing a number of details on how the various profits are distributed from Hulu advertising and my Netflix subscription fees.  Maybe the five available episodes on Hulu really is more beneficial for the content ownership companies, especially in consideration of other contract obligations they may have.  If this is so it is unfortunate, and I, the consumer feel like I lose out but can do little about it.  But maybe, just maybe, I am actually describing a legitimate insight into a kind of crazy system, in which everyone could probably be making out a little bit better.  I’d love to hear if other people have more insight in the workings of Hulu’s advertising and content availability as well as if anybody agrees with me and thinks the system is kind of flawed and actually a bit crazy.  Maybe someday the system will benefit everybody, from content owners to consumers a little bit more conveniently.  I guess until that time we’ve just got to deal with it.

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~ by Nathaniel on July 20, 2009.

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