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Apple Does the Hulu Tango With 2 Left Feet

By Richard Adhikari MacNewsWorld ECT News Network
Jul 31, 2012 11:35 AM PT

Hulu Plus content is now available on Apple TV.

Apple Does the Hulu Tango With 2 Left Feet

Subscribers to Hulu Plus will find the service on the Apple TV home screen, Hulu said. The company listed instructions on signing up for Apple TV owners who aren't currently subscribers.

However, some Hulu Plus content is still not available on Apple TV due to content licensing restrictions.

"When Hulu launched the free service, we obtained licensing to stream content directly to the PC, and only the PC," Hulu spokesperson Jen Lum told MacNewsWorld. "We tried to get as much overlap as possible, but there are still some exceptions that we are working to resolve."

The problem "speaks to the complexity of content licensing in which programmers primarily seek to maximize revenue in each distribution window," said Greg Ireland, a research manager at IDC.

The Apple-Hulu Plus Deal

Apple likely has the same kind of deal with Hulu as it does with Netflix, Sam Rosen, a practice director at ABI Research, told MacNewsWorld.

"Apple has a reseller agreement with Netflix that allows Apple to collect fees when subscribers sign up for Netflix on their Apple TV, as well as to collect a small percentage on a monthly basis as the consumer pays for Netflix content on their iTunes account," Rosen explained. "A similar relationship now exists with Hulu Plus."

As Apple develops Apple TV, "it will enforce similar restrictions to the App Store, forcing apps to use in-app purchases for additional content, ensuring Apple can earn revenues on new content," Rosen predicted.

Hulu's Lum declined comment on the terms of the deal, but "we are thrilled to be able to offer the ease and convenience of iTunes billing to Hulu Plus subscribers who choose to sign up via Apple TV."

The Licensing Choke Collar

The entertainment industry is restricting consumer access to movies as it did with access to music because services like Hulu Plus are "designed to supplement traditional viewing" and programmers "want to drive viewers to their primary television channel for viewing" so as to maximize their revenues, IDC's Ireland told MacNewsWorld.

Hulu "is not the sole decision-maker in deciding which shows and how much content is available on Hulu Plus," the company's Lum said.

Content owners "will leverage any means of restriction that is technically feasible" in order to maximize the lifetime value of their content, ABI's Rosen said. "Consumers will continue to be frustrated as content rights catch up with consumer demand."

That frustration might mount among Apple TV owners when iOS 6 is released, as that version of the OS will reportedly include Airplay and let Apple TV owners actively stream audio to external AirPlay-enabled speakers.

"Many apps already inhibit AirPlay in order to manage distribution preferences or requirements," Ireland pointed out. "So Apple could launch services, but the degree to which they can break the mold of how content is distributed depends in large part on what they are able to negotiate from the programmers."

Apple Plays It Canny

However, the entertainment industry is not solely to blame for the restrictions on content available to Apple TV owners.

"Apple is limiting approval of services to those that are subscription services such as Netflix, and Hulu Plus," ABI's Rosen said. "It's blocking services which offer rental and purchasing, such as Amazon, Instant Video and Vudu, as they would compete directly with iTunes rentals."

Battling the Competition

With Netflix already in its corner and now Hulu Plus, Apple "is carving out a place for itself rather than trying to dominate when it comes to video content aggregation," IDC's Ireland suggested. The iTunes video offering "has been very complementary to the Netflix service."

Apple TV "must be an aggregator of content to be attractive to consumers," ABI's Rosen opined. "Simply serving up iTunes or iCloud content cannot compete against other connected TV alternatives, including the Roku Smart Set-Top Box, smart TVs from Samsung, LG, or Vizio, or Microsoft Xbox."

However, with content costs constantly rising, content "is a means to add value to Apple's devices, but the money is being made on the devices," Ireland stated.

Apple did not respond to our request to comment for this story.

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