Hulu Plus Gets An A+: Hands On Review

Over the past few hours I've been testing Hulu's new Plus service and as aside from a few quirky issues with the player, the service is quite good. I've been using it on my MacBook, iPad and iPhone and the quality of the videos are excellent across all three devices. Hulu's 720p streams look just as good as Netflix's and of all three Apple devices, the size of the iPad screen naturally makes Hulu's videos look best on the iPad.

So far I have not seen any quality issues with the video and buffering is extremely low. As it should be, the quality of video with the Plus service is quite an improvement over the 480p content on Hulu.com. As a test, I found a clip from Scoundrels which starts off with a shot of a bunch of spinning windmills in the desert and there was no pixelation at all. Clearly Hulu got the encoding down right as things like spinning windmills and running water in shots tend to show pixelation very easily if not encoded properly. Even taking the video out of my MacBook and in to a 50" Vizio TV, the quality is very good.

The registration process to sign up for Hulu Plus is super simple and only requires your basic contact details and credit card info on one page and currently Hulu only accepts MasterCard and Visa. With the way Hulu displays all of the video preview windows, it could be very difficult to figure out which content is free and which requires a subscription. To address this issue, Hulu places a green plus icon next to any content that's available only with the subscription service.

While I didn't see any major problems with the service, there were a few quirks I came across in the player. When I changed my video player settings from auto-select to 720p as default, the video would stop and not start back up again. Clicking the update button would update my settings, but also require me to have to refresh the page and watch the ad all over again. I'm assuming this is an issue that Hulu will get fixed or that it could potentially be an issue on my side based on the version of my browser, player etc. I'll update the post when I hear back from Hulu on this. I've also reached out to Hulu to see if they will disclose some of their video encoding settings. I've also had an issue where the player delivers me the same ad twice, before it plays the video, but I don't think this is a widespread issue as it didn't do this all the time.

Whether or not Hulu Plus has enough content to make it worth paying for is something everyone is going to have their own opinion on. But from a technical and quality perspective, Hulu Plus offers exactly what one would expect it should for ten dollars a month.

Note: I didn't have time to capture video of Hulu Plus in action on my Apple devices but I'll try to update this post later with some videos.

(UPDATED) Move Networks Up For Sale: Three Parties Have Shown Interest

Update 7:53pm ET: Move Networks has just issued a press release saying that it, "intends to retain a financial advisor to assist the Company in evaluating strategic alternatives, including a possible sale of the Company." It has announced that President and CEO Roxanne Austin will step down, "following a brief transition period", and that Marcus Liassides who is the EVP of sales and biz dev will now be the President and handle day-to-day operations. Previously, Marcus was the CEO of Inuk Networks which Move acquired last year. Move also said that to converse cash the company "announced a reduction of its workforce".

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In the past month, Move Networks has received three offers from other vendors in the industry interested in potentially buying the company so it's no surprise to hear today that Move Networks is laying off employees and that Move's CEO Roxanne Austin will be leaving the company.

Even after all the problems and layoffs Move had more than a year ago, Move's board still seemed determined to try to make a go at it and bring some value back to the company in a different segment of the market, that being a platform for linear TV. While the board had seem fit to be in this for the long run and allowed Roxanne to add some new high profile executives to the board, it appears as if the investors are now going to cut their losses.

While terms of the deals that are on the table were not disclosed to me, in a call I had last week with one of the interested parties, they confirmed that multiple companies have approached Move Networks in the past month with interest in buying their assets. While I can't disclose who the companies are, some of them are a natural fit for simply bringing the technology in house and using it for their private network. I do know that the board has spent the past few weeks reviewing the proposals and with Roxanne leaving and others being laid off, it won't be long before the Move Networks brand is gone.

Combined, Move's investors including Benchmark Capital, Hummer Winblad Venture Partners, Steamboat Ventures and Televisa invested more than $67M into the company in three rounds. No one is going to be willing to pay that much for the company so unless the investors can get stock in the company that eventually purchases Move, they will lose money on the deal. I give them credit for trying to get Move up and running after all the problems they had, but they would have been much better off simply selling the company back in 2008. Hints of what was taking place came out today when someone posted a comment to Move's Twitter account suggesting the company was looking to sell the assets for $150M, but that's an obvious joke. No one is going to pay much for what Move has.

Move's downfall over the years is a great learning example for others and once again points out that you can't build a business on technology alone. Unless you have a way to take that technology and turn it into a product/service that has a business model that makes sense, the best technology in the world won't save you. Move learned that first hand and for anyone who has followed the company over the past few years, today's events won't come as any surprise.

Related:

- March 2010: ESPN To Use MLB To Stream All Their Events, Drops Support For Move Networks

- July 2009: Interview With Move's New CEO: Company Will Focus On Solutions For Full Linear TV

- July 2009: Move Networks Announces New CEO: Former DIRECTV President And COO

- April 2009: Move Networks Acquires IPTV Company, Adds To Their Confusing Portfolio

- Feb. 2009: Move Networks Lays Off 30% Of Company, John Edwards Still CEO

- April 2008: Move Networks Rasies C Round Totaling $67.9, Not $91.3 Million

Moderating Webinar At 12pm ET Today On "Encoding Best Practices & Strategies"

Today at 12pm ET I'll be moderating another StreamingMedia.com webinar on the topic of "Encoding Best Practices and Strategies". High-quality, efficient encoding and transcoding is crucial to the success of any online video initiative, but there are so many issues to consider—format, codec, bitrate, aspect ratio, and more—that the whole subject can be more than a little intimidating. Come learn the latest tips, tricks, and technologies for making your video look the best it can.

Presenters from Telestream, Sorenson Media, Twistage and ViewCast will talk about:

• Choosing video and audio formats
• Optimizing bitrate for bandwidth
• Transcoding content for multiple device delivery: PC, mobile, and TV
• Encoding and transcoding best practices
• Industry-leading transcoding technologies

Be sure to bring your questions, because there will be plenty of time for Q&A with and as the moderator, I'll be making sure we answer as many questions as possible from the audience. We have a record 1,709 people already registered for the event and you can still register and attend for free.

Hulu Plus Is Not A Threat To Netflix, They Are Two Different Services

With today's announcement by Hulu of their long awaited subscription service, Hulu Plus, it was only a matter of time before the blogsphere was quick to jump all over the news and suggest that Hulu is now a competitor to Netflix or that this some how gives consumers more reason to ditch cable. While it's easy to suggest this, the reality is that the business models, type of content, number of devices and other factors between Netflix and Hulu are very different.

CNET was quick to say that "Hulu has also made up ground on Netflix when comparing the number of devices that feature the services." But if you look at the number, that's not true. Netflix says they will be on 100 devices by the end of this year. Hulu looks like it will be on about ten. Devices like the Xbox 360 and others won't support Hulu Plus until next year.

Of course, for Netflix, none of their device success happened over night. It's taken Netflix three years and hundreds of millions of dollars to make this happen. Since Netflix does not rely on their streaming service to generate direct revenue, they can afford to spend the money and invest the resources to make their streaming offering as good as it is.

Hulu did just over $100M in revenue in 2009 and half of that money went back to the content owners. Compared to Netflix, Hulu has very little money to spend on R&D and can't dedicate the resources needed to work with dozens of consumer electronic manufactures to get their platform embedded into devices. Even Blockbuster, who is much larger than Hulu admitted they don't have the resources to work with all the hardware providers that they want to.

Not to mention, Hulu would have to design apps for a lot of these devices and none of that happens overnight. Hulu's CEO was even interviewed today talking about how each device needs to get a custom interface with new software. Just look at the amount of resources Netflix has put into this and it's still taken Netflix three years to get to the point they are at today. Hulu simply doesn't have the money or resources to replicate what Netflix has done anytime soon. That's not a knock on Hulu, it's just reality. Think of it this way. Hulu has been working on their Hulu Plus service for easily more than a year, and at launch, they will have only a few hardware partners. That shows just how long it takes and the work involved in getting a content offering integrated into a CE device.

The other big differences between the companies is the rate at which they move. Even though Netflix is much larger than Hulu, Netflix is very nimble. Talk to any of their hardware partners and they will tell you how easy it is to work with Netflix, how fast they get things done and how well their service works. Compare that to Hulu who is smaller than Netflix, yet is not known for moving very quickly and is completely new to working with CE manufactures.

Whenever someone says one service will replace another or at least compete with it, that means that it needs to provide a similar experience to what's in the market. Hulu is all about short-form content, TV shows, and Netflix is mostly about long-form content in the form of movies. Yes, Netflix has TV shows as well, but movies is their strength. Netflix has around 12,000 pieces of content and Hulu Plus will have about 2,000 to start. That's a big difference in the type and volume of content available.

As for those who suggest that Hulu Plus will now enable consumers to "cut the cord", that's just more hype. Hulu Plus and Netflix combined do not offer enough content for the average consumer. Sure, for some it will be sufficient, but not for the the vast majority of consumers. Hulu Plus will not start any kind of trend of cord-cutters.

Hulu's new subscription service is very straight-forward in what it offers and it's great that Hulu's CEO is very clear at where it fits in the market. At no time has he said it will replace Netflix, or that the cable companies should be worried. Hulu Plus is the first step for the company and this is not a sprint to the finish line. The battle for consumers eyeballs in the living room and across devices is only just beginning and there is a really long way to go before anyone is considered the winner. Hulu's Plus service is a great thing for the industry as it gives us another model in the market, another way to consume content and will enable other content owners to test the waters with new forms of distribution.

Will Hulu Plus work? Yes, but not like most people think. Hulu Plus is not meant to replace Hulu.com, only compliment it. Hulu Plus won't have millions of subscribers in the next few years and that's just fine, it does not need to. Hulu Plus is just another extension of the Hulu brand and is only the first of many types of content offerings to come. We should like Hulu Plus for what it is and not ike it by comparing it to Netflix, which it isn't.

Microsoft Confirms Hulu's Subscription Service Will Launch On The Xbox 360

Microsoft just announced that Hulu Plus will be available on the Xbox 360 console when it launches in early 2011. No further details are being given but Microsoft says they plan to use some of the Kinect features with Hulu's subscription service. Will update the post if more details become available.

Updated: Odd that the news put out from Microsoft says nothing about about a launch date, but Hulu's press release says Hulu will launch on the Xbox 360 "in early 2011."

Hulu Officially Launches $9.99 Subscription Service, App For iPhone, PS3 Soon

Finally all of the rumors and speculation can be put to rest. Hulu just announced on their blog that starting today, users can sign up for an invite to Hulu Plus for $9.99 a month. The company plans to offer the service via invitations to start so they can "ensure we’re offering the best experience." In addition to the PC viewing, Hulu also announced that Hulu Plus streaming will be available to iPhone and iPad users, including over 3G, and that support for more devices including the PS3 are on the way. Users of select Samsung Internet-connected TVs and Blu-ray players can also download a Hulu app for the plus service and I'm hearing that deals with more TV manufactures are on the way.

As I wrote about previously, no one would be willing to pay Hulu ten bucks a month considering the video quality on Hulu.com is so poor so it's no surprise that the company also announced that Hulu Plus members will have access to native HD content content in 720p. Hulu Plus gives subscribers access to lots of back catalog of TV shows including things like ten seasons worth of Law and Order SVU and plenty of other content. Hulu has a short video explaining what Hulu Plus is all about on their blog.

The real question is whether or not consumers are going to be willing to pay ten bucks a month for this kind of service. No one knows for sure, but one that is clear is that this is not going to have any negative impact on Netflix, so lets just hope we don't have to now read tons of posts by folks talking about how Hulu Plus is going to some how kill off other video services in the market.

Update: Microsoft just announced Hulu Plus will launch on the Xbox 360 in early 2011.

Special Device Demo Spots Available At Streaming Media West

At the Streaming Media West show in November, I will be presenting a device showdown session between Roku, Xbox 360, PS3, Apple TV and others. The goal is to allow attendees to see these devices in action, learn which platforms they run, what their video quality looks like and let them see the different content choices available for each device.

In addition to the session I am doing, I am thinking of adding a special demo session for all the new or updated products that will be launched around the time of the show. If your company plans to launch a new product or has something hardware based they want to demo, for free, please contact me. Ideally I am looking for vendors who have broadband enabled devices like TVs, Blu-ray players, gaming systems, etc.

Streaming Media West Program Done, Speakers Now Being Selected

Some of you may have noticed I've not blogged much over the past week and that's because I've been hard at work on finishing the advance program for the Streaming Media West show taking place in LA this year from November 1-3. The program is now down, all session subjects have been chosen and now it's time for me to begin the speaker selection process.

Here's a quick run down of all the session/presentation titles and you can download a PDF of the program with all of the session descriptions here.

• Technology Bakeoff: VP8 vs. H.264
• iPad Revolution: Streaming Media Boon or Bandwidth Bust?
• Internet-Enabled TVs And The Future Of The Connected Living Room
• Device Showdown: Roku, Xbox, PS3, and Apple TV
• Defining Advertising Standards And Stacks
• Debunking HTML5 Video Myths: A Guide For Video Publishers
• Mobile Video Syndication: App Stores and Smartphones
• Online Video Use Cases For Small And Medium Size Businesses
• The Future of Video In Education
• Here Comes Google: TV Meets The Web
• The Future Of Enterprise Webcasting
• What the Advertisers Want: Meet The Online Video Ad Buyers
• The Impact Of TV Everywhere And Over-The-Top Video
• Original Web Content: Are We Monitized Yet?
• Entertainment Content In The Cloud
• Windows Media Server and Network Troubleshooting In The Enterprise
• How Old Media Is Embracing Online Video and New Media
• Cutting The Cord On TV: Will Online Video Really Lead To Cable's Demise?
• Cost Savings From Enterprise Streaming: How The Conversation Has Changed
• Monetization And Video Advertising Formats
• The Impact Of Broadband-Enabled TVs, Gaming Consoles And Devices
• CDN Pricing: The Going Rate For Video Delivery
• Successful Content Syndication And Aggregation Strategies
• How To Produce Effective Educational Video
• HTML5 And Web Video Standards
• How Streaming Video Is Changing The Television Landscape

Workshops

• HTML5 And Web Video Standards
• Encoding H.264 Video for Streaming and Progressive Download
• Live Streaming with Microsoft Silverlight and Windows Media
• Flexible Delivery and Interactive Experiences on the Adobe Flash Platform

If you think you have a speaker that would be a good fit for one of these sessions, you have until Friday to send in a speaking request.

RGB Acquires Ripcode: $60M In Combined Revenue, $220M Combined Evaluation

This morning, RGB Networks announced it has acquired mobile video transcoding provider Ripcode in an all stock transaction. While terms of the deal were not in the press release, I had the chance to speak with RGB Networks CEO Jef Graham and Ripcode CEO Brendon Mills who gave me more details. Jef said that he expects the combined companies to generate about $60M in sales for 2010 and says that before the Ripcode deal, RGB Networks was already profitable. After the Ripcode integration he expects the company to return to profitability in "a couple of quarters". All but one of Ripcode's 26 employees will be folded into the new company, totaling 175 employees, and Ripcode's CEO will now be the GM and VP of the mobile video division.

In addition to Ripcode investors taking stock in RGB Networks, investors in both companies have also made an additional "small" investment into RGB to assist with Ripcode's burn rate. The investors now value RGB Networks at around $220M and to date, RGB has shipped $150M in products. While an evaluation of 4x revenue might seem a bit high in today's market, RGB has $11M in cash and with Ripcode's mobile offering, they really will have the only carrier-grade solution in the market to handle video to all three screens.

Since RGB has been successful in getting MSOs to put their ultra-dense video processing platform inside their network, it makes a lot of sense to now add the ability for the platform to also support mobile video since MSOs are desperately trying to figure out how to transcode video for mobile devices and optimize their network to handle the traffic. For Ripcode, the deal also makes a lot of sense and keeps them from having to raise another round of funding. To date the company had raised $32M in VC funding and with their cash burn rate, they would of needed to raise more funding shortly. While many acquisitions tend to seem like a good idea in principal, this is one of those rare deals where the synergy between the two companies is what I would classify as perfect.

Combined, Ripcode and RGB have a much better exit strategy and stand a better chance at getting taken out of the market as opposed to being stand-alone companies. While RGB's CEO mentioned the idea of an IPO when we spoke, my take is that the real play for them is being acquired down the line by a hardware company like we say with Alcatel-Lucent acquiring Velocix. While the market for these service are only just beginning, once the MSOs start offering more in the way of OTT video services, plenty of larger companies like Cisco and others are going to take notice and want to get into the game.

One of the things that always worries me in deals like this is the integration of the different technologies and platforms, but in this case, the integration for RGB should be pretty seamless. Ripcode's software already runs on the Intel platform and RGB simply needs to port that software over to their Intel based hardware and drop it into their rack mount system. Combined with the hardware are three modules that handle management of the content, ad insertion, a transcoding engine, and now the mobile offering. RGB said they expect all of this to be integrated into RGBs Video Multiprocessing Gateway product line by the fourth quarter.

With RGB already having more than 180 customers including Comcast, Time Warner Cable, Cox, Charter, Cablevision, Rogers, Shaw and Telus amongst others, if the MSOs can get their act together and actually deploy some real TV Everywhere services, RGB is clearly in the drivers seat to be the leader in the market for the solution the MSOs are going to be relying on. While I don't publish any kind of list of companies to watch in the space, if I did, RGB Networks would definitely be on that list.

Data From Q1 Shows Video CDN Pricing Stabilizing, Down 25% In 2010

Last month, at the Content Delivery Summit, I presented my latest pricing data from Q1 for video delivery services amongst the major content delivery networks and had the chance to meet with dozens of large content owners in the M&E space. (You can see the video of my presentation here.)Overall, pricing remained pretty stable and from everything I have seen so far in Q2, 2010 should be a pretty stable year for pricing when compared to 2009. Now halfway through the year I am willing to bet that the average pricing decline for video delivery will be between 20%-25% for 2010 compared to a average decline of 40%-45% for last year. (note: you can always find my latest pricing post at www.cdnpricing.com - Previous Quarters: Q4 09, Q1 09, Q4 08, Q3 08, Q2 08, Q1 08.)

At the same time, content owners I spoke to have some realistic expectations of growing traffic 40%-50% this year which means for the first time in five to six quarters, the CDN vendors in this space have a real good shot at improving their margins. While we have seen Akamai reducing pricing for video delivery services in the M&E vertical over the past two quarters, most of their re-pricing appears to have been completed. On new deals, Akamai is still being aggressive and coming close to Limelight and Level 3's pricing or tend to be just a little higher. Without a doubt, they have made their competitors jobs much harder when it comes to competing on price.

While it is impossible to know just how much market share the vendors have and who's taken the most share from one another, in the first half of this year I have seen Level 3 have more momentum in the market than Limelight. While Level 3 does not do as many press releases and is not as vocal as some of their competitors, I continue to see them growing quietly in the market. Akamai's been able to retain their market share only due to their re-pricing strategy and while Limelight hasn't gone anywhere, we have yet to see them really ramp their revenue and take the business to the next level. For Limelight, 2010 is going to be a make or break year for the company and I'll have more thoughts on that is a separate post shortly.

While I know some vendors don't like it when I always talk about Akamai, Limelight and Level 3, one can't argue with the fact that these three CDNs account for probably 70% of the entire market, specific to video delivery. Smaller guys like EdgeCast are still going strong, CDNetworks is rolling out new app services and guys like Amazon and others are making good traction in the SMB size of the business. But that fact remains that for all of the CDNs that have raised money and come to the market saying they will challenge the big boys, none of them have yet been able to even put a dent in the big three.

Part of that is simply due to the economics of scale. It's hard for a smaller CDN to compete with someone like Akamai on volume or with a Level 3 who owns the network. Of course this also makes many ask when the telcos and carriers are going to enter the space with their own CDN offering, but those days are long off. At the Content Delivery Summit, we had over a dozen carriers and telcos who all said the same thing on stage, that being that the market for video delivery service simply is not big enough. They didn't see the need to have to own the CDN product for another 2+ years. While some want to always disagree with me when I say the carriers won't be competitors anytime soon, you don't need to believe me, the carriers were very open and vocal about this on stage at the conference.

So much went on during the Content Delivery Summit that there is now way for me to recap it all but we now have all of the session online and available for viewing at www.streamingmedia.com/videos

I've been getting a lot of questions since the summit about traffic growth, pricing trends, value add services, app acceleration, device penetration, dual-vendor sourcing etc. and I still have not had the time to write up all the posts I wanted to. So in the mean time, while I try and get to all of these, please feel free to put any questions you have in the comments section and I'll try to answer them the same day.

In the second half of this year Frost & Sullivan will be releasing our annual report on the size of the content delivery market for video and I'll have more data and details to share about that shortly.