Hulu, It’s Your Move

It’s been a bumpy year for streaming entertainment. The players that established the space on upstart momentum have been faced with the harsh realities of their chosen business model.

First, the Netflix meltdown. While speculation about what actually happened behind the scenes persists, one thing is clear: this streaming gorilla lost some major steam in 2011 and may have permanently damaged its otherwise stellar reputation with customers and shareholders alike.

Next, the Stop Online Piracy Act (SOPA). This legislation, focused primarily on curbing copyright infringement among international content sites, also has implications for domestic U.S. sites including service providers, search engines, and ad networks. Harvard Law School Professor Jonathan Zittrain offers a thorough analysis. 

In the midst of these events, Hulu has been strangely quiet. Steadily growing their user base and revenue in methodical fashion, the Hulu team hasn’t seemed phased by the ebb and flow of their category. Don’t mistake their lack of scandal for a lack of strategy though. In February of this year, Hulu CEO Jason Kilar penned a long treatise on the business’s overall strategy, and unlike others in the category, their model is crystal clear:

• Be the future of TV
• Offer asynchronous content on any device
• Offer fewer ads
• Make those ads twice as effective
• Make those ads more profitable for the content creator and Hulu alike
• Offer premium content and services to users willing to pay for them

Sounds pretty good, but now is the time for capitalizing on Hulu’s stable position. As I reflect on their business both as a user and a strategist, I see several opportunities for Hulu to gain some advantage in 2012:

Push social harder. Hulu offers a free month of Hulu Plus for users who connect their account to Facebook. But post signup, social functionality is decidedly absent from the Hulu experience. Only by visiting Facebook directly and hunting down the Hulu application does social functionality really start to emerge. Hulu should take a page out of the Spotify playbook here, pushing social features hard, and upon signup, offering immediate social proof in the core interface: Here are your friends and here is what they are watching.

Lead the way on social viewing. Hulu puts comment streams under almost every episode on the site, and now Facebook is plugged in. The next step is logical. Rather than starting from scratch, why not partner with Skype to bring social viewing to life? Watching the latest episode ofHouse? Your brother is online, why not invite him to join you?

Offer content syncing. One of the major frustrations of any streaming service is the lack of connectivity when you need it. For many Hulu Plus subscribers, a train ride or a cross-country flight is the perfect time to enjoy the service, but a lack of connectivity makes this impossible. Hulu should once again look to Spotify, and allow Plus members to sync a few hours of programming to any device. Not only would this dramatically increase the value of the service, but might also justify a price increase (Spotify charges $9.99 vs. Hulu’s $7.99). You can save up to 4 episodes of programming for later.

Let users level up. Users everywhere are looking for ways to be rewarded for their actions. Hulu has an opportunity to track user behavior and loyalty, and apply some basic game mechanics to increase engagement. Users could be rewarded for daily viewing, completing a series, sharing videos, commenting, and trying new shows. Within a single show, users might want to earn status. With opportunities to level up, Hulu could offer the sort of engagement the television industry has desired for a long time. You’ve watched more consecutive episodes of The Colbert Report than anyone in New York. You’re a level 10 viewer and have early access to episodes.

Finally, one message for the savvy advertisers currently utilizing the Hulu platform. Stop using Hulu like traditional television. In a cable lineup that parades 1,000 ads you can get away with one 30-second spot. On Hulu, that spot is going to be recycled ad nauseam. After 10 repetitions, retention is through the roof. But after 30, some real contempt exists. The Hulu team has been committed to giving users more choice in advertising since the beginning, but it’s clear they lack the inventory to make ads interesting again. Help them out. Dear viewer, we know you watch ~5 hours of television programming a day, so we’re not going to subject you to the same exact ad 60 times during that session. Instead, we’re going to weave a more complex and benefit-rich narrative. Enjoy!