Hulu's Superbowl Ad and the Boxee Fight

[A note to start. My company, Wesabe, is funded in part by a venture firm, Union Square Ventures, which is one of the funders of Boxee, a character in the drama described below. That said, I’ve never met or spoken with anyone from Boxee, and have only ever talked to Union Square about them to ask for an invite. I don’t have any access to any inside information about Boxee. This post is based instead on the time I spent working at Lucasfilm from 1997 to 1999. Well, really, the following isn’t based on Lucasfilm itself, but instead on my conversations with the major studios (of which Lucasfilm is not one — Fox/Disney/etc., who control distribution, are) about this topic of video on the Internet, which was just starting to be hotly debated at the time.

Some of the comments below also come from participating in discussions about copy protection and Divx, which, if you’ll remember, was at that time a self-destructing DVD-like format that would let the studios control how long you could watch their entertainment. No, seriously, it started to self-destruct when it was exposed to air and these people all thought it was certain to win over DVD. Wrong, but instructive.]

The secret to understanding why Hulu‘s “content providers” — and boy do they love being called that — have instructed Hulu to block Boxee users from their “content” — again, not what they would call it — isn’t some big secret. In fact, it was broadcast during the Superbowl, in Hulu’s excellent Superbowl ad:

[Update: I’m told you can’t see that embedded video unless you live in the US. If you don’t, can you see this YouTube copy? I’ll laugh if that works. Let me know. Update again: Yeah, you can watch the Hulu ad from anywhere on YouTube. That’s awesome. It’s even Hulu’s YouTube account that posted it!]

Here’s the relevant part, as spoken by Alec Baldwin:

Hulu beams TV directly to your [sardonic gesture to the camera] portable computing devices, giving you more of the cerebral-gelatinizing shows you want, any time, anywhere, for free.

Emphasis added: portable computing devices. Not to your TV — from your TV. To your dumb-ass laptop, you smelly, hairy, friendless, gamer-freak nerd. (Sorry, I hate to talk about you that way, but that’s how they think of the Internet. I think you smell great.) To your TV is something completely different, and from the “content providers'” point of view, completely wrong. Aren’t Apple and Tivo and YouTube bad enough as it is?

Boxee was featured in an awesome New York Times article one month ago, with a picture of their product on a big-screen TV, and Hulu’s logo clearly visible in the upper right corner. I can almost hear some lawyer somewhere in Hollywood screaming, “I thought Hulu was a WEB SITE! I do NOT see a WEB BROWSER in this PHOTOGRAPH!” at the sight of it. Boxee’s blog post on the controversy says they heard from Hulu about this two weeks ago; I’d bet Hulu heard from that lawyer two weeks before that — the morning the article appeared. Those calls are fun.

You’d think the “content providers” would know already this — Boxee — would happen; even with Hulu gone from Boxee, I can still watch Hulu on my TV, albeit with a much lamer interface. Hooking a computer to a TV is easy enough. Maybe they did know, and just waited to see how Boxee would get along until it got too high-profile to ignore. I doubt it, though. Most entertainment lawyers don’t go for the idea, “Let’s allow it for a little while and see what happens.” They instead argue, “Let’s stop it immediately and see if we have a better option we can control more, later.” I’d guess Hulu had a deal to show “content” on computers, and the “content providers” balked when those computers started talking to their precious televisions.

So why does Hulu exist at all? Hulu must have seemed like the “better option” for getting people to watch TV ads on their computers — better, perhaps, than the iTunes Music Store selling the same “content” piecemeal and getting price control over video as they have for music. Or, perhaps, than YouTube, selling and showing ads without the studios necessarily involved in any way. Let’s control ads on the Internet by putting them on our “content” through Hulu, an entertainment industry company, not a smelly nerd company. Great. It’s a plan.

Maybe BitTorrent came up in the discussion, but I doubt it — BitTorrent is for smelly nerds. This isn’t about you folks. This is about the mass market. Those people can’t be disrupting their TV watching with some WEB SITE they saw in the NEW YORK TIMES.

So that’s my guess about why Hulu blocked Boxee: those ads you see on Heroes are higher margin when you see them on your TV than when you see them on Hulu, and the only reason they’re on Hulu is to make money from Heroes when you watch it online, so Apple or Google doesn’t make that money instead. They were meant for your “portable computing devices” and not your precious TV. Now go back to the couch until we call for you again.

I’m sure Hulu is totally pissed. They pretty much said just that in a somewhat more stilted way. The real insult, though, is calling the people who made them cut Boxee off “content providers.” They might as well have told the studios they are the moral equivalent of the guy schlepping reels around the projector booth. Someone will win this war eventually, they seem to be saying, and you could have helped make it us. Now you have a choice: someone else — not you, someone smart — will win instead, or you can change your mind.

That’s pretty much my view, too. DVDs (mentioned in the note at the start) became a big boon for the studios, once their crazy ideas about self-destructing Divx discs went the way of the Dodo. The studios have a very long history of betting against technology people want, and on technology people don’t want. This is just another such case. The technology people want always wins in the end — no duh — and usually benefits the businesses who fought that technology to the death. Here’s hoping the technology people want — Boxee — doesn’t wind up benefiting the studios fighting it now.