WEBVTT - The Dramatic Evolution of Hulu 0:00:04.440 --> 0:00:12.280 Welcome to Tech Stuff, a production from iHeartRadio. Hey there, 0:00:12.280 --> 0:00:15.440 and welcome to tech Stuff. I'm your host, Jonathan Strickland. 0:00:15.440 --> 0:00:18.560 I'm an executive producer with iHeart Podcasts and how the 0:00:18.600 --> 0:00:21.680 tech are you? So? In our last episode, I covered 0:00:21.720 --> 0:00:25.640 the origins of Hulu, the streaming service that started off 0:00:25.840 --> 0:00:30.200 as a joint venture between NBC Universal and News Corp, 0:00:30.480 --> 0:00:34.760 two competing media companies. So we got up to twenty thirteen, 0:00:35.120 --> 0:00:39.240 which was a tumultuous year for Hulu. Jason Kayler, the 0:00:39.320 --> 0:00:43.400 original CEO for Hulu, the guy who really helped shape 0:00:43.479 --> 0:00:48.200 what Hulu would become, left the company. His interim replacement 0:00:48.400 --> 0:00:52.360 would also leave before the year was over. Mike Hopkins, 0:00:52.479 --> 0:00:56.240 who became the new CEO, had formerly been an executive 0:00:56.320 --> 0:00:59.040 at Fox Networks Group, and so he came from the 0:00:59.160 --> 0:01:04.280 news course of the business. Other changes had also happened 0:01:04.319 --> 0:01:07.960 by that point, right, So Disney joined newscre at NBC 0:01:08.080 --> 0:01:12.000 Universal and became a joint stakeholder in Hulu. This meant 0:01:12.000 --> 0:01:15.160 that three of the four broadcast companies in the United 0:01:15.200 --> 0:01:19.440 States were stakeholders. You had ABC, which was owned by Disney, 0:01:19.600 --> 0:01:22.440 you had Fox, which was owned by News Corp. And Obviously, 0:01:22.560 --> 0:01:27.119 NBC Universal had NBC, so CBS was the only holdout. Also, 0:01:27.400 --> 0:01:32.039 Comcast would acquire NBC Universal, which in itself is a 0:01:32.160 --> 0:01:36.280 very complicated story. Comcasts first announced this deal in late 0:01:36.319 --> 0:01:39.960 two thousand and nine. The initial part of this acquisition 0:01:40.160 --> 0:01:44.160 concluded in twenty eleven after a lot but arguably not 0:01:44.600 --> 0:01:49.640 enough scrutiny from regulators. But Comcast wouldn't get full ownership 0:01:49.640 --> 0:01:54.480 of NBC Universal until General Electric divested its remaining stake 0:01:54.520 --> 0:01:58.520 in the company in twenty thirteen. These things are super complicated, 0:01:58.560 --> 0:02:01.440 but that's pretty much par for the course for media companies. 0:02:01.480 --> 0:02:05.480 If you look back over the corporate ownership history of 0:02:05.520 --> 0:02:08.079 any major media company that's been around for at least 0:02:08.120 --> 0:02:13.040 a decade, it gets messy. Anyway, Comcast becoming the new 0:02:13.080 --> 0:02:16.560 corporate daddy to NBC Universal is why we will later 0:02:16.639 --> 0:02:20.320 be talking about a showdown between Disney and Comcast toward 0:02:20.360 --> 0:02:23.720 the end of this episode. Another big change also happened 0:02:23.760 --> 0:02:26.760 in twenty thirteen that would impact the future of Hulu. 0:02:27.040 --> 0:02:30.440 On June twenty eighth of that year, news Core, which 0:02:30.520 --> 0:02:34.359 was the media empire of Rupert Murdoch, split in Twain. 0:02:34.919 --> 0:02:39.480 That is, newscrep would become two separate companies. Now, one 0:02:39.520 --> 0:02:42.800 of those companies, twenty first century Fox, would include the 0:02:42.840 --> 0:02:47.640 famous twentieth century Fox film studio, the Fox Television Networks, 0:02:47.800 --> 0:02:51.960 and a stake in National Geographic Newscrep would be the 0:02:52.160 --> 0:02:56.760 publishing arm of the company. As part of this divestment, 0:02:57.200 --> 0:03:01.919 Newscrep transferred its stake in hul to twenty first century Fox. 0:03:02.240 --> 0:03:04.560 Now this is the reason we don't have to talk 0:03:04.600 --> 0:03:08.600 about Disney, Comcast and newscre at the end of this episode, because, 0:03:08.639 --> 0:03:12.399 as I'm sure most of you are aware, Disney subsequently 0:03:12.440 --> 0:03:15.560 gobbled up twenty first century Fox in twenty nineteen, which 0:03:15.600 --> 0:03:19.320 means Disney slice of Hulu's high would just get bigger 0:03:19.320 --> 0:03:22.120 and bigger. But I'm getting ahead of myself, so Hulu 0:03:22.240 --> 0:03:26.480 was also changing outside of these big corporate maneuvers. The 0:03:26.720 --> 0:03:29.880 initial business model of Hulu was to offer up ads 0:03:29.919 --> 0:03:34.560 supported viewing of recent television episodes. So as a user, 0:03:34.800 --> 0:03:38.520 originally you would go to the Hulu website, so you'd 0:03:38.640 --> 0:03:42.520 use a laptop or desktop PC and navigate to the 0:03:42.600 --> 0:03:46.600 Hulu website. Keep in mind, this is when smartphones are 0:03:46.640 --> 0:03:50.080 a brand new thing, so using a smartphone to navigate 0:03:50.080 --> 0:03:54.000 the web was still very new when Hulu launched officially 0:03:54.000 --> 0:03:56.400 in two thousand and eight. So you would use a 0:03:56.520 --> 0:03:59.520 PC or laptop to go to Hulu's website and you 0:03:59.520 --> 0:04:02.640 could watch a few of the most recent episodes of 0:04:02.760 --> 0:04:07.200 various television programs that were provided by content partners. Typically, 0:04:07.960 --> 0:04:11.040 you could view the episode that had most recently aired 0:04:11.040 --> 0:04:15.640 on TV anytime between the following day up to the 0:04:15.680 --> 0:04:19.440 following month. It all depended upon the actual agreement between 0:04:19.440 --> 0:04:22.880 the studio and Hulu. We'll talk about that again in 0:04:22.920 --> 0:04:26.039 a bit. You did not have access to the back 0:04:26.200 --> 0:04:29.480 catalog of episodes of any show, didn't matter what network 0:04:29.520 --> 0:04:32.520 it was on. You might be able to watch the 0:04:32.520 --> 0:04:35.440 most recent five episodes, and then on top of that, 0:04:35.600 --> 0:04:38.920 you could potentially have access to around half a dozen 0:04:39.040 --> 0:04:42.599 other episodes from across the entire history of a show, 0:04:43.200 --> 0:04:45.600 but you would have no control over which episodes those 0:04:45.640 --> 0:04:48.640 would be. So maybe you'd know for a show that 0:04:48.720 --> 0:04:51.560 had lots and lots of seasons, like ten or more seasons, 0:04:51.640 --> 0:04:54.559 you might have a couple of episodes from season four, 0:04:54.680 --> 0:04:57.080 and then maybe a couple from season six or whatever, 0:04:57.240 --> 0:05:00.320 but they wouldn't necessarily connect to each other and wouldn't 0:05:00.320 --> 0:05:02.279 be able to say which ones you got to see. Now, 0:05:02.320 --> 0:05:04.719 just a little bit more backtracking before we continue on 0:05:04.800 --> 0:05:07.200 with our story, because there's some elements that I did 0:05:07.200 --> 0:05:10.880 not mention in the last episode. In twenty ten, Hulu 0:05:11.080 --> 0:05:14.480 had introduced Hulu Plus, a subscription based service that let 0:05:14.560 --> 0:05:19.640 audiences access an entire season the most recent season of 0:05:19.920 --> 0:05:24.000 episodes for shows. So you could get access to a 0:05:24.080 --> 0:05:27.919 full season of episodes, not the entire history, but at 0:05:28.040 --> 0:05:31.039 least the most recent season if you were a subscriber, 0:05:31.440 --> 0:05:34.000 and it costs seven dollars ninety nine cents per month. 0:05:34.080 --> 0:05:36.920 Now I believe that on Monday's episode, I said nine 0:05:36.960 --> 0:05:40.240 dollars ninety nine cents. That's because I was pulling that 0:05:40.279 --> 0:05:43.640 from other sources. And to be fair, Hulu has changed 0:05:43.640 --> 0:05:48.039 its pricing throughout its history, but the actual initial price 0:05:48.080 --> 0:05:50.839 when it launched was seven dollars ninety nine cents per month. 0:05:51.120 --> 0:05:55.479 This service was also ad supported, so customers still had 0:05:55.520 --> 0:05:57.279 to go through some ads in order to do this. 0:05:57.440 --> 0:06:00.159 So you're paying you know, essentially eight bucks a month, 0:06:00.200 --> 0:06:04.039 but you also still get ads. So analysts were predicting 0:06:04.240 --> 0:06:07.599 that this subscription model was going to fail because who 0:06:07.640 --> 0:06:11.040 the heck was going to pay to access television programming 0:06:11.080 --> 0:06:14.479 that otherwise they could get for free, although you didn't 0:06:14.480 --> 0:06:16.279 really get it for free. You got in return for 0:06:16.320 --> 0:06:19.240 whatever your cable or satellite package was, unless you were 0:06:19.240 --> 0:06:23.640 actually using antenna to pick up over the air broadcast. Well, 0:06:23.839 --> 0:06:27.120 it turned out that Hulu's method worked pretty well. It 0:06:27.200 --> 0:06:31.120 did not go down in flames as the analysts were predicting. 0:06:31.360 --> 0:06:34.479 In twenty eleven, the service boasted it had hit a 0:06:34.560 --> 0:06:38.080 million subscribers, and Kyler said that the service would bring 0:06:38.080 --> 0:06:41.240 in around two hundred million dollars after it had been 0:06:41.320 --> 0:06:44.080 launched for a year, the subscription service, that is, and 0:06:44.080 --> 0:06:46.200 that's a lot of money. But then Hulu was also 0:06:46.240 --> 0:06:50.479 spending a lot of money securing content partners, right because 0:06:50.720 --> 0:06:54.560 it wasn't just ABC and Fox and NBC that was 0:06:54.920 --> 0:06:58.960 providing content to Hulu. Hulu was securing licenses with lots 0:06:59.000 --> 0:07:01.760 of different content partners out there, and that cost money. 0:07:02.040 --> 0:07:05.919 Cable networks and providers were growing concerned that Hulu was 0:07:06.000 --> 0:07:09.760 cannibalizing their audiences, and there was a lot of friction 0:07:10.240 --> 0:07:13.640 in the media space. So, for example, in twenty ten, 0:07:13.800 --> 0:07:18.560 newscre got into a serious tif with Cablevision, the cable 0:07:18.560 --> 0:07:22.120 provider these two companies were in a fundamental disagreement over 0:07:22.200 --> 0:07:27.000 retransmission fees. News Core was playing hardball and it ended 0:07:27.080 --> 0:07:31.880 up blocking Cablevision subscribers from accessing programming, and that included 0:07:32.120 --> 0:07:36.680 online programming. So if you were a Cablevision ISP customer 0:07:37.040 --> 0:07:39.000 and you tried to go to Fox dot com to 0:07:39.080 --> 0:07:41.600 watch Fox material, or if you tried to watch Fox 0:07:41.640 --> 0:07:45.160 material on Hulu, you would get blocked, which made a 0:07:45.200 --> 0:07:48.080 lot of people mad. And it really made people angry 0:07:48.520 --> 0:07:53.320 that they weren't able to access sports programming because the 0:07:53.360 --> 0:07:56.800 World Series of Baseball was coming up and Cablevision was 0:07:56.840 --> 0:08:00.000 trying to hold out from having to pay higher retransmission. 0:08:00.880 --> 0:08:05.360 This one battle really just encapsulates a much larger story 0:08:05.680 --> 0:08:09.880 of traditional media versus streaming media. And keep in mind, 0:08:10.160 --> 0:08:14.040 it's kind of funny because traditional media companies were the 0:08:14.120 --> 0:08:18.400 owners of the streaming service Hulu. So again, very complicated. 0:08:18.600 --> 0:08:22.040 Television had been king for decades, but the cord cutting 0:08:22.080 --> 0:08:25.040 trend was really emerging big time. It would only get 0:08:25.040 --> 0:08:27.920 worse down the line. Here's a fun side note. Around 0:08:28.000 --> 0:08:31.120 the same time, CNN reached out to me to comment 0:08:31.480 --> 0:08:35.320 on the trend of cord cutting. So I did I 0:08:35.360 --> 0:08:39.080 gave CNN some information about cord cutting and like the 0:08:39.120 --> 0:08:40.720 trends that were going on at the time and the 0:08:40.800 --> 0:08:44.240 reason for those trends. And I got a talking too, 0:08:44.800 --> 0:08:47.720 because at the time, the company I worked for, house 0:08:47.720 --> 0:08:52.319 stuff Works, was owned by Discovery Communications, a cable channel 0:08:52.800 --> 0:08:57.440 company cable network company, and Discovery did not like that 0:08:57.520 --> 0:09:00.559 I was talking about cord cutting, as if some how 0:09:00.640 --> 0:09:04.839 I was affecting cord cutting, as if I was responsible 0:09:04.920 --> 0:09:07.920 for it. I was commenting on something that was happening, 0:09:08.040 --> 0:09:11.240 whether I talked about it or not. And I'm pretty 0:09:11.280 --> 0:09:13.800 sure that I was not the reason A bunch of 0:09:13.800 --> 0:09:16.160 people suddenly said, you know what, You're right, it is 0:09:16.240 --> 0:09:19.720 time we stopped paying cable. So I still think it's 0:09:19.720 --> 0:09:23.080 funny that I was talked to about this and that 0:09:23.160 --> 0:09:26.480 it was a whole thing because I'm like, you guys 0:09:26.520 --> 0:09:29.080 are treating me like I'm way more important than I am, 0:09:29.160 --> 0:09:31.480 and if I am this important, you need to pay 0:09:31.600 --> 0:09:34.600 me more. Right. That's the lesson you learned, is that 0:09:34.600 --> 0:09:36.800 if I'm important enough to be a threat to your business, 0:09:36.960 --> 0:09:40.000 I'm important enough for you to pay me more money. Anyway, 0:09:40.559 --> 0:09:43.040 that was a tangent side note, doesn't really matter. The 0:09:43.320 --> 0:09:47.320 TV based businesses were desperately clinging onto a model that 0:09:47.440 --> 0:09:50.600 was just going out of style. Thus the talking to 0:09:50.760 --> 0:09:55.160 I got so my personal opinion is that the decline 0:09:55.400 --> 0:10:00.040 of broadcast and cable television was inevitable. That nothing that 0:10:00.120 --> 0:10:03.760 these companies did was going to stop that decline. It 0:10:03.880 --> 0:10:06.240 was just going to happen. So all they could really 0:10:06.280 --> 0:10:08.840 do is try and slow things down as much as 0:10:08.880 --> 0:10:12.560 they could, or to make things difficult on streaming platforms 0:10:12.640 --> 0:10:16.199 which were kind of in an investment and growth mode, 0:10:16.800 --> 0:10:21.240 or the traditional companies could try and create their own 0:10:21.280 --> 0:10:26.280 strategies to segue into the streaming model, the internet based 0:10:26.320 --> 0:10:30.120 model of delivering entertainment. A lot of those media companies 0:10:30.160 --> 0:10:32.920 resisted that, or they tried to buy up companies that 0:10:32.960 --> 0:10:36.280 were kind of already doing that and use that as 0:10:36.320 --> 0:10:38.960 their on ramp. Hulu itself was kind of an on 0:10:39.120 --> 0:10:42.400 ramp for that kind of thing. But because these streaming 0:10:42.440 --> 0:10:45.319 services were in investment and growth mode, it meant they 0:10:45.320 --> 0:10:47.880 were not focused on making a profit at this time. 0:10:48.120 --> 0:10:51.520 That was not the main goal of the early years 0:10:51.520 --> 0:10:54.280 of these services. They were trying to establish a large 0:10:54.360 --> 0:10:58.040 customer base and to scale as quickly as possible. This 0:10:58.200 --> 0:11:00.880 was really bad news for the cable industry because it 0:11:00.960 --> 0:11:04.840 meant that this new competitor was willing to operate at 0:11:04.880 --> 0:11:08.800 a loss. Right, They were not operating with fear of 0:11:08.840 --> 0:11:11.559 how it was going to affect their profits because they 0:11:11.559 --> 0:11:15.679 weren't profitable. They were operating at a way of gaining 0:11:15.960 --> 0:11:19.160 new customers. But the cable industry was looking at a 0:11:19.200 --> 0:11:24.240 shrinking customer base and angry shareholders. So they were in 0:11:24.280 --> 0:11:27.920 a very different situation, and it was a pretty volatile situation. 0:11:28.520 --> 0:11:31.520 We're technically still kind of in that situation, but at 0:11:31.520 --> 0:11:34.199 this point, I think most folks acknowledged that cable TV 0:11:34.880 --> 0:11:39.000 is seriously on the decline. In fact, you know, Kyler 0:11:39.800 --> 0:11:43.560 wrote an essay in twenty twenty three, the former CEO 0:11:43.679 --> 0:11:46.960 of Hulu wrote an essay in twenty twenty three that revealed, 0:11:47.080 --> 0:11:50.679 quote linear television declines at a rate of close to 0:11:50.840 --> 0:11:54.400 ten percent per year in the United States end quote. 0:11:54.480 --> 0:11:58.920 And further that quote, the median age for most entertainment 0:11:58.960 --> 0:12:02.800 shows was over sixty end quote. And that is the 0:12:02.840 --> 0:12:06.240 median age for linear television entertainment. So, if you've ever 0:12:06.280 --> 0:12:09.160 wondered why so many TV shows seem to cater to 0:12:09.200 --> 0:12:12.000 the elderly. That's why the elderly are the ones who 0:12:12.000 --> 0:12:15.080 are still watching television in the first place. Kyler also 0:12:15.120 --> 0:12:17.960 said that out of all the streaming platforms in twenty 0:12:18.000 --> 0:12:20.920 twenty three, and there were a ton of them at 0:12:20.920 --> 0:12:25.640 that point, only Netflix quote is generating material cash flow 0:12:25.679 --> 0:12:29.160 from streaming end quote. So Kyler wasn't saying that streaming 0:12:29.280 --> 0:12:32.160 was a doomed business model, and I'll try to come 0:12:32.200 --> 0:12:34.400 back and touch on that. I just really wanted to 0:12:34.520 --> 0:12:37.720 establish the setting that Hulu was part of an early 0:12:37.840 --> 0:12:41.520 wave of streaming services that were changing the way audiences 0:12:41.840 --> 0:12:47.800 access entertainment and ultimately how they would challenge the status quo. Okay, 0:12:47.800 --> 0:12:49.680 we're going to take a quick break. When we come back, 0:12:50.000 --> 0:13:03.120 we'll talk more about Hulu's evolution. We're back. So one 0:13:03.160 --> 0:13:06.560 thing that I failed to mention in the previous episode 0:13:06.800 --> 0:13:11.600 was that Hulu was broadening its access. So again, originally 0:13:11.640 --> 0:13:15.160 when Hulu launched, it was a website full stop. And 0:13:15.240 --> 0:13:17.679 keep in mind, like Hulu launched in two thousand and eight, 0:13:17.760 --> 0:13:20.480 so iPhone comes out in two thousand and seven, we 0:13:20.559 --> 0:13:24.840 don't really get the app store until two thousand and eight, 0:13:25.160 --> 0:13:28.320 so we wouldn't get into a glut of smartphone and 0:13:28.400 --> 0:13:32.080 mobile device apps for a couple more years. The app 0:13:32.160 --> 0:13:35.120 landscape was still kind of on the horizon when Hulu launched, 0:13:35.200 --> 0:13:38.120 so the one way you could access Hulu content was 0:13:38.120 --> 0:13:41.040 on a computer, though if you were willing to put 0:13:41.040 --> 0:13:43.440 in the work, you could technically use a television as 0:13:43.480 --> 0:13:46.760 a display and watch content on television that way, but 0:13:46.840 --> 0:13:49.480 that was kind of janky for most people. It was 0:13:49.520 --> 0:13:52.000 beyond the reach of a lot of folks. They would 0:13:52.000 --> 0:13:55.679 wait until there would be more integrated solutions, either with 0:13:55.760 --> 0:13:59.920 streaming boxes or with smart televisions or that kind of thing. 0:14:00.360 --> 0:14:03.640 So you couldn't watch Hulu on television in the early days. 0:14:03.840 --> 0:14:06.360 But a couple of years after launch, Hulu began to 0:14:06.400 --> 0:14:09.600 release apps and work with device manufacturers to make Hulu 0:14:09.640 --> 0:14:14.120 available through other devices, which would include smartphones and tablets 0:14:14.160 --> 0:14:17.040 and over the top services as well as like video 0:14:17.080 --> 0:14:21.600 game consoles and smart TVs. This wasn't straightforward, however, and 0:14:21.640 --> 0:14:26.520 the experience could really leave customers frustrated because Hulu still 0:14:26.560 --> 0:14:30.800 had to secure agreements with all the different content providers, 0:14:30.840 --> 0:14:34.680 of which there were many, so again, Hulu wasn't just 0:14:34.760 --> 0:14:38.080 serving up stuff that could be found on ABC NBC 0:14:38.240 --> 0:14:41.280 and Fox, and not everyone would agree to all the 0:14:41.400 --> 0:14:45.960 terms and they would require specific exceptions. So for some shows, 0:14:46.320 --> 0:14:50.400 viewers might be allowed to access an episode on any 0:14:50.440 --> 0:14:54.000 device running a Hulu app like it could be a computer, 0:14:54.280 --> 0:14:56.800 a smartphone, it could be or television, doesn't matter. But 0:14:56.880 --> 0:15:00.480 for other shows, viewers might only be restricted to the 0:15:00.520 --> 0:15:03.640 web browser version on a PC. So it would be 0:15:03.640 --> 0:15:06.120 weird because you could log into Hulu on your computer 0:15:06.280 --> 0:15:08.960 and watch a show like that, but if you were 0:15:09.000 --> 0:15:12.040 to pull up your Hulu app on a streaming service, 0:15:12.160 --> 0:15:15.080 like on a box connected to your television, that show 0:15:15.120 --> 0:15:18.720 would not be there, and that was really confusing. Also, 0:15:19.200 --> 0:15:22.240 shows would have different premiere dates on Hulu. Some episodes 0:15:22.240 --> 0:15:25.480 premiered the day after they aired on television, some eight 0:15:25.600 --> 0:15:28.560 days after they aired, so the following week. Some had 0:15:28.600 --> 0:15:31.360 a delay of thirty days, so like a full month. 0:15:31.680 --> 0:15:33.880 And this was all over the place, and it meant 0:15:33.880 --> 0:15:37.480 that using Hulu was confusing. This was not the fault 0:15:37.480 --> 0:15:42.120 of Hulu, but because the powerful studios could command these conditions, 0:15:42.440 --> 0:15:46.280 they were the ones that were dictating the terms. They 0:15:46.280 --> 0:15:49.960 felt incentivized to do this because they were, you know, 0:15:50.480 --> 0:15:53.640 they were playing in a new space. Even shows that 0:15:53.800 --> 0:15:57.720 aired on one of the stakeholder networks on ABC or 0:15:57.800 --> 0:16:01.600 Fox or NBC, they weren't immune to shenanigans either. So, 0:16:01.680 --> 0:16:04.600 for example, The New York Times reported that The Middle, 0:16:04.760 --> 0:16:08.320 which was an American sitcom that aired on ABC, which 0:16:08.320 --> 0:16:11.360 belonged to Disney, and Disney was a stakeholder, that show 0:16:11.480 --> 0:16:14.720 was not available on Hulu back in twenty eleven. But 0:16:14.800 --> 0:16:17.960 why I mean? Like I said, ABC was part of 0:16:18.120 --> 0:16:21.760 the major stakeholders in Hulu, so what gives? Well, while 0:16:21.840 --> 0:16:25.720 ABC would broadcast The Middle, the studio that actually made 0:16:25.760 --> 0:16:28.960 the show was Warner Brothers. So ABC had secured the 0:16:29.000 --> 0:16:32.480 rights to broadcast the show, but Warner Brothers made the show. 0:16:32.920 --> 0:16:36.080 Warner Brothers declined to have The Middle available on Hulu. 0:16:36.280 --> 0:16:40.160 As to why, well, we can only speculate, but chances 0:16:40.160 --> 0:16:42.440 are it was an effort to protect the show so 0:16:42.520 --> 0:16:44.880 that it could make more money when it was put 0:16:44.920 --> 0:16:49.320 into syndication, because syndication is a very lucrative market for 0:16:49.640 --> 0:16:53.440 first run shows. So chances are Warner Brothers didn't want 0:16:53.440 --> 0:16:58.080 to cannibalize syndication fees, and so they chose not to 0:16:58.200 --> 0:17:01.520 have that show available on Hulu. It was and still 0:17:01.640 --> 0:17:04.480 is complicated, in large part because of how young the 0:17:04.520 --> 0:17:08.120 streaming business was. It was hard to know what would 0:17:08.160 --> 0:17:11.960 be important. Now, arguably, it wasn't hard to know what 0:17:12.040 --> 0:17:15.639 was important to the audience. The audience wanted access to 0:17:15.720 --> 0:17:19.080 their favorite shows. They wanted it to be in a 0:17:19.160 --> 0:17:22.200 reasonable way where they're not waiting a month to get 0:17:22.240 --> 0:17:25.119 the next or the latest episode. They wanted it to 0:17:25.200 --> 0:17:28.600 be cost efficient so they're not spending ridiculous amounts of 0:17:28.640 --> 0:17:31.639 money to do it, and preferably they'd like it to 0:17:31.960 --> 0:17:35.679 come along without an overabundance of ads. But for the 0:17:35.720 --> 0:17:39.400 cable companies, you know, the channels, the studios, the TV shows, 0:17:39.880 --> 0:17:43.159 Hulu itself, all the media companies that were part of this, 0:17:43.480 --> 0:17:47.280 things were less clear. So the negotiation process was a long, 0:17:47.440 --> 0:17:50.720 complex and often it was unique from case to case, 0:17:51.040 --> 0:17:54.320 so it was a huge hassle. Honestly, it's a miracle 0:17:54.359 --> 0:17:58.120 that Hulu was able to persist at all, particularly when 0:17:58.119 --> 0:18:02.240 you consider that ultimately the corporate owners are competitors with 0:18:02.280 --> 0:18:05.080 each other other. Stuff that was going on outside of 0:18:05.119 --> 0:18:08.080 Hulu would also have a major impact on the general 0:18:08.160 --> 0:18:11.800 landscape as well. Amazon's digital video offerings were picking up 0:18:11.840 --> 0:18:15.639 steam despite the company changing the service multiple times. So 0:18:16.040 --> 0:18:20.480 Amazon started with a service called Amazon Unbox where you 0:18:20.520 --> 0:18:22.520 could buy a digital copy of a movie and then 0:18:22.720 --> 0:18:25.640 you downloaded it. You weren't streaming it, you were downloading 0:18:25.680 --> 0:18:28.560 it to your computer to watch later. But this would 0:18:28.600 --> 0:18:32.720 eventually become Amazon Video on Demand. Then it became Amazon 0:18:32.840 --> 0:18:36.800 Instant Video, and then it became Amazon Prime Video, but 0:18:36.920 --> 0:18:39.840 from Amazon Video on Demand. Further, it was pretty much 0:18:40.240 --> 0:18:45.040 the streaming model, so the streaming options were really going on. 0:18:45.240 --> 0:18:48.399 By twenty eleven, Amazon Prime members would get access to 0:18:48.480 --> 0:18:51.280 Basic Prime Video service as part of their membership, and 0:18:51.320 --> 0:18:55.399 that boosted things considerably for that service. Also in twenty eleven, 0:18:55.600 --> 0:18:58.400 Voodoo announced that it was launching its own streaming service. 0:18:58.720 --> 0:19:01.760 We would also get Twitch in twenty eleven as a 0:19:01.800 --> 0:19:05.920 spinoff of Justin TV now. Twitch was and is more 0:19:05.960 --> 0:19:10.480 focused on user generated content, primarily centered around gaming, but 0:19:10.600 --> 0:19:14.600 not exclusively, so you are not supposed to rebroadcast stuff 0:19:14.640 --> 0:19:18.840 like television and films on Twitch. But Twitch is important 0:19:18.920 --> 0:19:22.160 because while it didn't directly compete with Hulu as far 0:19:22.240 --> 0:19:25.400 as content goes right, it's two different types of content. 0:19:25.520 --> 0:19:28.000 It does compete with Hulu when it comes time to 0:19:28.119 --> 0:19:31.480 talk about where are customers spending their time and money. 0:19:31.720 --> 0:19:33.840 If they're doing it on Twitch instead of Hulu, well 0:19:33.840 --> 0:19:36.960 then Twitch is still a competitor, even though you would 0:19:37.040 --> 0:19:41.080 argue they're not in exactly the same business. Cable channels 0:19:41.080 --> 0:19:43.960 and providers were also creating on demand viewing options for 0:19:44.000 --> 0:19:46.760 customers around this time. So, for example, in twenty ten, 0:19:47.000 --> 0:19:51.440 HBO introduced HBO Go. This would let HBO subscribers access 0:19:51.600 --> 0:19:55.879 on demand HBO programming through a website, app, or digital 0:19:55.920 --> 0:19:59.040 media player. Customers had to first authenticate that they were 0:19:59.080 --> 0:20:02.280 in fact a pay being subscriber to an HBO package 0:20:02.800 --> 0:20:07.160 in their cable television service, then they would be able 0:20:07.160 --> 0:20:11.480 to access this content online. Cable providers were doing similar stuff, 0:20:11.640 --> 0:20:14.719 allowing customers to authenticate their identity and then access a 0:20:14.760 --> 0:20:18.240 suite of content online. So the streaming industry was starting 0:20:18.240 --> 0:20:22.200 to coalesce, but it was taking different pathways depending upon 0:20:22.520 --> 0:20:25.800 who was behind the service. But now let's skip ahead 0:20:25.800 --> 0:20:28.840 a couple of years. So Hopkins had taken over as 0:20:28.880 --> 0:20:31.879 CEO at the end of twenty thirteen. The next really 0:20:31.920 --> 0:20:34.760 big development in Hulu's history, besides the fact that they 0:20:34.800 --> 0:20:39.159 would launch more original content, would come in the summer 0:20:39.200 --> 0:20:42.600 of twenty fifteen, and that's when Hulu announced that customers 0:20:42.600 --> 0:20:46.199 could pay to access a premium ad on channel. The 0:20:46.280 --> 0:20:50.320 first premium ad on channel Hulu would offer would be Showtime. 0:20:50.760 --> 0:20:54.120 Now this is interesting from a corporate standpoint because once 0:20:54.160 --> 0:20:57.720 again there's a lot of dramatic stuff happening behind the scenes. 0:20:58.040 --> 0:21:01.719 You know, forget shows like Dexter or Penny Dreadful that 0:21:01.760 --> 0:21:06.040 were on Showtime, The really juicy drama was happening in 0:21:06.119 --> 0:21:11.560 corporate boardrooms. So Showtime falls under the corporate umbrella of CBS. 0:21:11.800 --> 0:21:14.920 And if you recall, CBS was the one major broadcast 0:21:14.920 --> 0:21:17.600 network in the United States that was not a partner 0:21:17.640 --> 0:21:20.920 in Hulu because you had NBC, Fox, and ABC, which 0:21:21.200 --> 0:21:24.760 again was owned by Disney being the stakeholders of the company. 0:21:25.160 --> 0:21:27.520 CBS had tried to go its own way, first with 0:21:27.640 --> 0:21:31.360 TV dot Com and then in twenty fourteen, CBS launched 0:21:31.480 --> 0:21:35.960 CBS all Access. In twenty twenty one, CBS all Access 0:21:36.000 --> 0:21:41.040 would transform into Paramount Plus. Again, the streaming world is 0:21:41.119 --> 0:21:43.840 it's despite the fact that the streaming services world is 0:21:43.960 --> 0:21:47.280 fairly young, it's not even really more than like twenty 0:21:47.359 --> 0:21:51.480 years old. It's incredibly complicated and confusing, especially here in 0:21:51.520 --> 0:21:54.880 the United States. So for CBS to agree to license 0:21:55.000 --> 0:21:58.280 showtime content to Hulu as a premium add on was 0:21:58.280 --> 0:22:01.280 an interesting move. Customers who I wanted this add on 0:22:01.640 --> 0:22:04.320 would have to bump up their subscription fee and additional 0:22:04.440 --> 0:22:07.080 eight dollars ninety nine cents per month, which is interesting 0:22:07.119 --> 0:22:09.399 because that meant the add on costs more than the 0:22:09.600 --> 0:22:13.440 basic Hulu service of seven dollars ninety nine cents. However, 0:22:13.760 --> 0:22:16.919 it did cost less than it would cost customers if 0:22:16.920 --> 0:22:21.040 they got Showtime service through a device partner, because that 0:22:21.080 --> 0:22:24.240 fee was set at ten dollars ninety nine cents. Are 0:22:24.240 --> 0:22:28.040 you confused yet because I am. Anyway, this seemed to 0:22:28.080 --> 0:22:31.879 be an indication that the entrenched old media was becoming 0:22:31.960 --> 0:22:35.520 concerned about the future. You know, maybe putting up staunch 0:22:35.520 --> 0:22:39.639 resistance to streaming wouldn't work. Maybe it really was inevitable 0:22:39.760 --> 0:22:41.880 that streaming would at the very least take a big 0:22:41.920 --> 0:22:45.840 old chunk out of TV's numbers, and so media companies 0:22:45.840 --> 0:22:49.320 were starting to hedge their bets a little bit. In 0:22:49.400 --> 0:22:54.040 September twenty fifteen, Hulu would introduce a new option to subscribers, 0:22:54.359 --> 0:22:57.320 So for twelve dollars a month, you could get your 0:22:57.400 --> 0:23:01.960 content ad free. Arguably this was a necessary move because 0:23:02.000 --> 0:23:04.880 Netflix was running away with it in terms of success 0:23:04.920 --> 0:23:08.040 in the streaming space. So around this time when Hulu 0:23:08.040 --> 0:23:12.600 introduced this new subscription tier, they had around nine million 0:23:12.640 --> 0:23:16.400 subscribers in the United States, which isn't bad, but Netflix 0:23:16.440 --> 0:23:19.920 had forty one million at that point. So Hulu needed 0:23:19.920 --> 0:23:23.920 a way to gain more subscribers, and the company figured 0:23:23.960 --> 0:23:26.200 there were folks who were just bulking at the thought 0:23:26.240 --> 0:23:28.679 of having to pay a subscription and still have to 0:23:28.720 --> 0:23:33.439 watch ads anyway, So Hulu introduced the tier, so if 0:23:33.520 --> 0:23:36.240 you wanted to pay less, you could pay the seven 0:23:36.320 --> 0:23:39.760 ninety nine per month and watch material with ads. For 0:23:39.920 --> 0:23:42.640 the premium price of twelve dollars a month, you could 0:23:42.680 --> 0:23:45.199 get that same stuff but without the ads. And the 0:23:45.200 --> 0:23:47.119 hope was that the folks who really didn't want to 0:23:47.160 --> 0:23:49.560 deal with ads would now flock on over to Hulu. 0:23:49.800 --> 0:23:52.119 And you might be saying to yourself, but hang on, 0:23:52.800 --> 0:23:56.159 didn't Hulu also have a way to watch programming for 0:23:56.200 --> 0:23:59.600 free with no subscription at all. With ads, you know, 0:23:59.640 --> 0:24:02.520 you had fewer options. You couldn't watch full seasons, you 0:24:02.520 --> 0:24:05.719 could only watch a few episodes in the most recent 0:24:05.880 --> 0:24:08.840 airing of a show, but you still could do that 0:24:08.960 --> 0:24:15.280