Hulu's Desktop App: A Wake-Up Call For Cable Operators

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Hulu downplayed talk that its new desktop application will encourage more consumers to flip on their computers rather than their TVs. But network execs say they believe it’s another chess move in the battle over the living room, which is about to get a whole lot bloodier.

Hulu executives insist the move is only “a natural extension of the Hulu service as we continue to be focused on innovating in the online, PC environment.” But there’s no denying that the new app simulates a TV-like experience — with the added advantage of being able to also watch the shows you want, when you want and with fewer ads. It even works with a remote control. In Hulu, broadcast TV finally has a player in the sweepstakes to deliver on-demand TV.

“Does it come from cable video on demand or from internet delivery on your TV? Who owns that interface and that customer relationship?” asked one close observer, who, like most of those contacted by Ad Age, wanted to remain anonymous.

 Ad Age Digital  DigitalNext  MediaWorks Right now, cable operators are in the power position: They own the billing relationships and control the consumer experience of TV. Meanwhile, they’ve put digital video recorders in more than 30% of American homes, undermining the advertising model that supports broadcast and, to a lesser extent, ad-supported cable. Now they’re hoping to solidify that — and possibly put satellite TV on the ropes — by rolling out “network” DVRs this summer, which would allow subscribers access to virtually any show on-demand, immediately after broadcast. After that, the only question is how fast DVR use spreads and whether cable will allow ad-skipping. (Satellite doesn’t have the bandwidth to offer such a service).

“If broadcasters don’t do anything and let the DVR world get to 70%, what kind of world does that leave us in?” said one network executive.

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