A Web Video Truce: Free Hulu Goes Away From Boxee, Replaced by Hulu Plus
The Hulu-Boxee war is over! The terms of the truce: Boxee, which makes software that makes it easy to get Web video on TV, will remove links to Hulu's free service-but will give users the ability to use the Hulu Plus paid service.
Context & Ripple Effects
This truce closes a fight that opened in February 2009, when Hulu pulled its streams from Boxee and framed the move as protecting its content partners — prompting Boxee's own account of the trials of innovating against a distributor's wishes and an outside case that Hulu should embrace the platform instead. Eighteen months on, the terms have flipped: Boxee gets access only by dropping the free tier, which is exactly what Hulu wanted all along.
The timing is not accidental. The truce lands alongside the $199 D-Link Boxee Box finally shipping with Netflix and Hulu Plus on board, and Hulu CEO Jason Kilar is projecting $240M in revenue for 2010 — so Hulu is converting a renegade second-screen audience into a metered one just as its hardware channel goes retail.
First-order effects
- Boxee users immediately lose free, ad-supported Hulu inside the software, and the replacement is a $9.95/month Hulu Plus subscription that also debuts on the newly shipping $199 Boxee Box.
- Hulu gains a compliant living-room distribution point without conceding anything on its own site or apps, while Boxee trades user goodwill for legitimacy with the networks whose shows make its box worth buying.
Second-order effects
- A rumored Hulu Plus price cut from $9.95 toward $4.95 would make sense precisely because deals like this one put the paid tier in front of device owners who never visit hulu.com, pushing Hulu toward volume pricing.
- Other connected-TV platforms — including Google TV, which broadcasters had been hostile to — now face a demonstrated template: access to network content comes bundled with promoting the paid service, not scraping the free one.
Third-order effects
- If the pattern holds, the free, embeddable web-video era gives way to a two-tier system in which content owners let hardware partners in only through paid tiers — making subscription deals, not browser compatibility, the currency of TV-platform negotiations.
The trend: Web video is splitting into a fenced-off free tier and a device-distributed paid tier, with content owners granting set-top-box access only through subscription deals they control.