Best of Web: How Hulu Reinvented itself for Live TV
Chris Welch | www.theverge.com | May 3, 2017
It’s mid-February and I’m seated in a dark room at Hulu’s Santa Monica headquarters. Flanked by the company’s user experience research experts, we’re all peering through a one-way glass mirror into a brightly lit “living room” test lab. The subject is a 30-something volunteer who is getting an early look at Hulu’s new app and its live TV service. Both are launching today, May 3rd, to millions of US customers. The study volunteer has signed numerous non-disclosure agreements and will be paid for his time. Unbeknownst to this person, he’s swiping through what is Hulu’s biggest gamble ever since the company’s start.
Hulu is no longer just that place you go for next-day TV show replays. Starting right now, Hulu becomes its own live TV provider. You pay a monthly $39.99 bill, and for that money you get the “regular” Hulu service with over 3,500 TV and film titles, plus a live TV package of over 50 channels. There’s no cable box. Hulu’s live TV is available on Android, iOS, Apple TV, Chromecast, and Xbox One at launch, with support for Roku and Fire TV devices coming later this year. The company’s operating philosophy resembles those of competitors like Sling TV, PlayStation Vue, DirecTV Now, and YouTube TV. To Hulu, TV is meant to be mobile, TV should work around your lifestyle, and TV is supposed to be an app. Hulu has put a ton of work into building that app. Hopefully this guy doesn’t hate it.
“Sometimes what can occur is we’re asking them to talk aloud and just give this running commentary, and sometimes people get quiet,” Jill Strawbridge, who leads Hulu’s UX research, says of the study I’m observing. “But from our perspective, where they get quiet is quite telling because it generally means they’re having to devote more attention to something.”
This particular study subject seems mostly pleased with Hulu’s “first-run” experience, which is how the app formulates what shows and movies it should recommend to you. When you open the new Hulu, it’ll ask about your favorite genres, your must-have shows, and your preferred networks. Millions of people already subscribe to the current service, so in many cases the company will already have plenty of data to pull picks from. But you can also choose to start fresh. Up to six profiles can be set up on each account, and parents can enable kid profiles that automatically limit available content to family-friendly selections..
Helming this entire experience is Ben Smith, who came to Hulu from the Xbox One team and Microsoft’s own ineffective attempt to reinvent TV on a video game console. The “new Hulu experience” (a top-to-bottom overhaul of the entire app) and live TV represent another, even bigger chance at reshaping how consumers think about television.
“You can’t talk about the next 10 years of TV and video experience without talking about live,” Smith tells me. “Live TV isn’t going away. So for us it’s how do we make it best for the viewers of 2017, for the viewers of 2020, and the viewers of 2025?” Hulu isn’t alone in wanting to solve that question. Cable and satellite providers are trying to reverse subscriber losses by evolving their services beyond just a huge bundle of channels with a DVR into something more. These days, Comcast’s X1 platform lets you speak commands to its voice remote just as you would to Siri or Google Assistant on your smartphone.
Smith is answering to very different bosses this time around. Hulu’s parent companies are all media giants. ABC/Disney, 21st Century Fox, and Comcast each hold a 30 percent stake in the business; Time Warner owns 10 percent. Hulu will offer programming from all four in the live streaming package, so that covers CBS, NBC, Fox, TNT, TBS, and CNN. The company has also signed critical deals with Disney (including ABC and ESPN), Scripps (HGTV, Travel Channel, Food Network), and others. AMC is a glaring omission. Hulu TV users will have to get their Walking Dead and Better Call Saul elsewhere.
Despite its being owned by different megacorps with their own respective interests, Smith says that all parties are behind the new Hulu direction. “At a pure technology level, all of the major networks are highly invested in building out this kind of next-generation TV experience for everyone.” Even if Comcast, the parent with the most to lose, weren’t a fan, FCC restrictions around its purchase of NBCUniversal prevent the company from influencing Hulu’s business decisions until 2018.
Yet even with that support, the challenges that internet TV services like Sling TV, DirecTV Now, Vue, and Hulu face in maturing from nascent efforts into mainstream cable rivals are plentiful and daunting. People love what they’re used to, and all it takes to be dropped from a consumer’s consideration is failing to provide their favorite channel or show. Hulu is launching its live TV product without any Viacom networks, so it won’t offer Comedy Central, Nickelodeon, MTV, VH1, BET, CMT, and other channels.
At least the company can say it’s not alone in dealing with this programming hole. DirecTV Now and Sling TV have Viacom as part of their channel listings; Vue and YouTube TV don’t. Smith says that Hulu and Viacom were friendly partners for years, but still puts the current state of things bluntly: “We just couldn’t find the right deal that worked for both of us.”
Hulu shares something else in common with its relatively young competitors: it will only offer live feeds of the big four broadcast networks (ABC, CBS, Fox, NBC) in select regions. Six at launch, to be more specific. That covers a lot of people in major cities, but leaves vast parts of the US with no way to watch The Voice or Modern Family or Empire or Designated Survivor live as they air. Instead, subscribers will get Hulu’s regular video-on-demand replays for those networks and live streams for everything else.
“To a large extent, that’s not us. That’s the networks themselves,” explains Smith. “There is the technology integration piece, which we’ve found gets harder as you go from major markets from smaller markets.”
Your random small-town NBC or CBS affiliate isn’t always well-equipped for this whole internet streaming thing, it turns out. Hulu executives visited one market “where literally there’s a guy pressing a button for commercial breaks.” That convoluted affiliate structure and uneven technology balance means it’ll be a very long time before Hulu or another over-the-top service can live stream all four broadcasters nationwide.
Hulu and the big four have discussed offering a national feed in areas where affiliates aren’t participating, but Smith said there are no immediate plans to go that route. “What I told the network groups is I want to see what their channel offering is. Because if it’s just a bunch of crap, then it’ll be worse to have it — you know, paid programming all day long.”
And then there can be unforeseen crises, like when this year’s Golden Globes couldn’t be streamed with any of these apps. It was an embarrassing night for Sling TV, DirecTV Now, and Vue, and a frustration that zero cable viewers had to contend with. “It caught all of our attention,” says Smith of the Globes blackout and resulting social media backlash. “That agreement was signed eons ago before things like streaming were contemplated. So NBC had no grant-of-rights to air that in its original airing outside of NBC cable and satellite and their terrestrial OTA.”
Translation: ancient, poorly conceived contracts were to blame. But the reason never really matters much to customers — only that they couldn’t watch what they wanted to. “Now, everyone has been looking for these,” Smith adds. “We were on the phone [the following] Monday morning with Fox going ‘Alright, we need you guys to go through every event you have, every network special you air…’ and they were like ‘We’ve already got people on it.”
Hulu acknowledges that these random you’re not allowed to stream this moments might still occur on its own service. “I am sure we will see it at some point,” confesses Smith. But the company is poring over each agreement it signs to avoid ugly surprises.
In the test lab, a Hulu employee is asking our subject a question about where he’d expect to find sports teams in the app. Sports is another primary focus for the live TV product. You can select your favorite teams to have the service automatically follow them across channels and record games to your cloud DVR. Hulu will offer regional sports networks (RSNs) in “many” markets; YES is available in the New York area, for instance. But by now, sports fans should know that watching games isn’t always straightforward. “We have learned a lot about blackout rules. ESPN has taught us a lot about blackout rules,” Smith jokes; in a later interview, he tells me it’s “more complicated than the SATs.” Hulu, he vows, is “going to help customers through it.”
No one has dealt with that complexity more than Tian Lim, Hulu’s chief technology officer. “It’s crazy what the sports networks will make you do,” he tells me, venting about the precise latitude and longitude coordinates that dictate markets which are to be included in a blackout. “No one had a standard way of declaring blackouts.“ So Hulu encouraged standardization — both for its own benefit and to ease things for everyone else in the space. “One set of RSNs might use an API, another might send you a spreadsheet, another might send you an email.” Those seem like less-than-ideal ways of telling a company they’re not allowed to stream a professional sports game. And those declarations are sometimes tied to stadium ticket sales and can come minutes before game time.
Lim says that his team (totaling around 200 developers) has put in a staggering amount of backend work alongside partners to bring order to things. This also applies to metadata for regular TV shows; depending on what kind of source feed Hulu is working with, figuring out the markers for when TV shows actually begin and end — fundamental to having a competent DVR — and pulling in accurate episode data isn’t always so simple. “There’s one two-parter Seinfeld episode that just throws off everybody. This whole metadata challenge has been crazy.”