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Boxee vs. Hulu vs. Cable (Spoiler: The Customer Loses)

If Dire Straits was to release "Money For Nothing" in 2009, Sting would be faintly singing "I want my Family Guy." I’m sorry MTV, but FOX is pumping out one of the hottest pop culture shows these days. Family Guy is also at the center of a massive fight about online video, content ownership, and new distribution methods. It’s quite simple: A network airs a show on TV with ads, Hulu airs the show online with ads, Boxee users watch the show on TV or their computer with Hulu ads, and everybody is happy. Obviously you would have to live in an obscure Amazonian tribe to think that last sentence is true. Nobody is happy! So what’s the big deal and how can both the companies and customers win?

Weigh In
Early in 2007 NBC Universal and News Corporation launched a small venture called Hulu. They provided high-quality online video content from major networks and film studios. Striking their own distribution and ad deals they have had great success airing shows like Family Guy, SNL, and The Daily Show, and movies like Liar Liar, The Karate Kid, and Rocky III. In two years they have become one of the most watched video sites on the Internet (after YouTube, of course). Great content, minimal ads (a lot less than on TV), and excellent distribution—it’s no wonder people are flocking to this site.

In the fall of 2008 Boxee raised $4 million to build a social, open source media center. (Thats $96 million less than Hulu raised.) Users can share what they are watching and listening to, and interact with others on multiple social platforms. Boxee also allows you to use your Apple TV to stream video content to your nice, big, shiny HDTV. At the most simple level, Boxee allows people to share media links; at its most complex level, it can allow users to develop their own customizable media center for their homes.

Major Networks and Studios
Still the kings of video, TV/Cable networks and film studios still have the cash advantage to create great content and ultimately (attempt to) control how that content is distributed.

Round 1
On Feb 18, Avner Ronen, founder and CEO, announced on the Boxee blog that Hulu had asked Boxee to remove its content from the service. After several weeks of pleading with Hulu—it is one of the most popular channels on Boxee—Ronen agreed to remove Hulu content. The users were livid. Facebook groups boycotting Hulu were started, angry comments were posted on Hulu’s blog and site, and in general Boxee fans were upset and could not understand how this happened.

On the same day Hulu CEO Jason Kilar posted a heartfelt entry on the company blog. Basically, he apologized to Boxee users but said that "our content providers requested that we turn off access." Quotes from Walt Disney and a genuine tone in his post did not help silence the fans.

Round 2
On March 6, there was a new Boxee release with support for public RSS feeds, including Hulu’s public RSS feed. Along with the release—still in early beta form—comes another blog post with much warmer sympathy for the major networks and studios.

Later that afternoon Hulu blocked their public RSS feeds from being accessed by the Boxee application. With no public response from Hulu or the big media folks, Boxee has continued to point to the access they provide to legal and public content. Basically, if you put it out there we will share it.

Round 3
No one knows what the future holds, but as long as big media pushes and pulls its content online, users will clamor for it. While Boxee may have a small user base now, they are definitely a glimpse into the future of what online video distribution will look like. It’s also important to note that quite a few Boxee users have cancelled their cable service and are watching all their content online—and that’s what has the cable and broadcast companies up in arms.

(Hulu also recently pulled its content from TV.com); see related article here.)Companies are making money off of ads on traditional delivery through broadcast and cable TV, online distribution companies are making money through ads, and users are paying by watching them, whether its through Hulu’s site, Boxee, or embedded players on myriad blogs. So why the fear? Change is scary but it is coming, whether we like it or not.

I want, I want, I want my Family Guy...

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