Of Hulu, Ads and User Experience (and its New Widgets)

Watching TV on the Internet is great because it’s a true on-demand experience. It really is what, when, where I want, and how, with multiple benefits. Set up a laptop on the counter, and watch/listen while doing dishes, brushing teeth, watering plants ... no need to pre-set the device before a show to tell it what I want, plus the ability to pause, and jump back and forth and carry the laptop elsewhere to any room (or anywhere). No need for a subscription to any on-demand service. Ability to use the laptop to look up something while I’m watching, or have the video full-screen and sit back and relax. Send a link to friends, or embed. Use headphones. Shoot my own video response. Watch with a friend or my wife or kids....

Add to that the relative infrequency and shortness of commercial interruption. Hulu CTO Eric Feng points out in an interview for NewTeeVee that a 22-minute network show with eight minutes of ads on broadcast or cable has two minutes of commercials on Hulu. (He also says the average Hulu user watches for more than an hour, and that there were 90 million streams -- per month, if I understood). So, watch a show on Hulu and you get more TV for less. With only two minutes of ads, it would hardly be worth forwarding through.

Yet, I can’t help but wonder how long it will be before the economic pressure will cause Hulu and other services to increase the number and frequency of ads. TV used to have relatively fewer ads. Terrestrial radio has, many would say, been ruined by the ad-to-programming ratio. The pressure to increase revenues is relentless and hard to resist. As Feng acknowledges in the video -- there’s another of him on TechCrunch today, and both videos are due to Hulu’s newly launched widgets -- the ads at this point are somewhat repetitive. That’s surely because of a relatively low number of advertisers, the need to serve the promised number of impressions, and the lack of ability to interrupt every single type of clip, either because of its length or the nature of its content. But as users/viewers increase, and more advertisers move to Hulu-like platforms, and more platforms spring up, we’ll see more pressure to create more ad inventory, and downward pressure on CPMs. (I was intrigued to hear from a Quantcast exec in a recent panel I moderated for the Magazine Publishers of America say that CPMs will rise short-term because measurability is increasing and is not yet where media buyers want it to be.)

As Jupiter Research analyst Bobby Tulsiani noted last week, “user experience is king” online. A key part of that experience is not only ease of use, clarity of clicking, architecture and so on, but also the experience of not having to see too many ads, especially ones that may be irrelevant or annoying. If ads didn’t hurt the user experience, folks wouldn’t forward through them when they could. And how long until users on the Web start clicking away from programs due to ads, even as they did on cable and broadcast long before the advent of TiVO? How much will a user put up with even if he has proactively gone to a program to watch it on demand? How long before there’s a TiVO for Web content? TV has finally started to change. World News Tonight recently had a sole sponsor and fewer minutes of interruption than the typical version of the evening news show. And, I’m hoping that after the video ad deluge on the Web, we’ll see that a change in online user behavior, will force similar consideration of balance between editorial and commercial imperatives.

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