The Problem With Hulu, the iPad and Cheap TV

Any TV show, on any screen, anytime. Free, or at least reallyreally cheap. That's the dream.

The two most obvious, potential avenues for this dream of cheap, awesome TV anywhere, anytime are iTunes and Hulu. Let's review: Apple's reportedly been greasing the wheels with the major broadcasters and networks for an iTunes subscription deal that would net you a bundle of your favorite TV shows from various networks for $30 a month—killing your cable plan. They're also trying to sell Big TV on selling shows for a buck a pop, like music. And they're trying to line these deals up in time for the iPad launch. Hulu, a joint venture between NBC Universal, News Corp (read: Fox) and Disney (read: ABC) is awesome—a huge way savvy US residents can catch on 30 Rock and most other TV they wanna watch—and it too reportedly wants to be on more screens than your computer monitor, even if it freaks out a bit when somebody tries to put up on your TV.

The problem, of course, is money. In iTunes' case, it's obvious where the issue is: Selling TV shows for 99 cents not only makes less money per episode, but even if the revenue drop is made up by boosted volume, people's perceptions of what a TV show is worth will change. TV shows are expensive. A TV show like Terminator: The Sarah Connor Chronicles costs millions an episode to make. So does Mad Men, and it's not like there are explosions and killer cyborgs in between shots of whiskey and smoking. You thinking that a TV show is worth just a buck, the networks do not want. The Jersey Shore may cost significantly less, and indeed, it's that kind of disposable, cheap-to-make reality and game shows that the networks would possibly even consider hawking for a dollar a pop. But then the fear still lingers—not everybody realizes that it costs more to dress Don Draper than Pauly D.

The cable-killing subscription Apple's proposing doesn't just frighten the networks, it irks the cable operators and the ISPs who are no doubt selling you TV too—the AT&T U-Verse and Verizon FiOSes of the world. Instead of spending $100 a month on a gazallion channels, you'd be picking up a bundle of shows you actually like for a third of the price, using the internet access you already have, tying up more of their already crowded pipes, which they complain about (even as they offer fatter and fatter bandwidth, and scare you into buying as much as you can). So the cable companies threaten the networks not to be too loosey-goosey with their content, and along with some networks, come up with their own schemes to solve the problem that we increasingly expect to watch TV on any screen, like Comcast's Fancast or TV Everywhere or HBO's new streaming service, all for subscribers only.

But what about Hulu? It's owned by three of the four major networks, after all. Well, it's not making enough money. Hence talk of paywalls, monthly subscriptions, and other ways to make money, like charging for an iPad app. In fact, it might be worse than we thought—Business Insider hears that execs at one of the networks is complaining that Hulu's ad team is undercutting the networks ads in a bad way, "hollowing out ad sales." (Though, duh, they're cheaper, they're reaching a smaller, less targeted audience, since advertisers can't buy ads for particular shows on Hulu, just genres.) Either way, the networks want Hulu ads to get more expensive, not less.

So, Apple and Hulu dig for new ways to make money. Apple's come up with ways to make you watch ads during iTunes shows, possibly to subsidize cheaper or subscription content. Hulu's continually experimenting with the ads the site runs, looking for ways to charge more for them. And eventually, for Hulu itself.

But all that effort might not pay off, regardless. If anybody could get the networks to bend to new models of television, it'd be Apple, or their own side project. But, they really, really want you to keep on watching on your TV, like a normal red-blooded American. Hulu and cheap TV shows on the iPad, and everywhere else would be awesome. For now though, you're better off just hoping.