September 23, 2013 • 39 mins
What are the differences between the three big video streaming services? How do these services earn revenue? Which services have exclusive deals?
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Episode Transcript
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Speaker 1 (00:04):
Get in touch with technology with tech Stuff from how
stuff works dot com. Hey there, and welcome to tech Stuff.
I'm Jonathan Strickland and I'm Lauren and today we're going
to talk about streaming video services, and really we're going
to focus on three big names in streaming video, knowing
that there are lots of other names out there, but
(00:27):
the three were specifically looking at. The three biggest as
of right now are really kind of sort of maybe
ish are Hulu plus Amazon Instant and Netflix, And keeping
in mind, will also talk a little bit about Hulu,
we'll talk a little bit about probably mentioned some of
the other services like iTunes obviously also has streaming and
(00:48):
Apple TV right, and there's so many different choices out there,
these were the big three. I mean, obviously if you
own something like um an Xbox three sixty, then you
also have stuff the Microsoft Video that you can buy
stuff or rent stuff on. Then there's also PlayStation and
Sony have a deal. So the Google TV is another example.
(01:10):
There are a lot of different technologies out there that
are all about streaming content over the Internet in your
television or computer. Even YouTube. You could argue, is is
that content provider? Oh sure, sure, I can. I view
YouTube all the time when I'm at home. There's this
great series I love to watch at home on my
big television. It's called Forward Thinking. It is amazing. The
(01:31):
host is uber uber Hut and so I watched that
all the time at home on my big television and
it's great. I mean, you know, it is filmed with
the red one, So so the I mean, yeah, actually
we upgraded to a four kN K to four K.
I mean they went from two K to four K.
So they're like, we said, a lot of different choices
(01:53):
out there, but let's focus on probably the I would
argue this is probably the most well known name. And
in the interest of full Disco, sure, we're gonna be
talking about Netflix. And Netflix has been one of our
sponsors in the past. They are one of our sponsors
for tech stuff. But we're just going to talk about
the way that it works and how it kind of started.
So if you look all the way back to nineteen seven,
(02:15):
that's when the company Netflix formed, and at that time
it was just kind of an idea. It hadn't even
there wasn't a business there yet. That was really kind
of the paperwork. So it was on paper. It wouldn't
be until nine that they actually launched a subscription DVD
mail to home plan plan. Yeah, they were offering up
(02:38):
rentals and sales, and but it was when the famous
subscription service came in, that idea where you would make
up a list of DVDs that you were really excited
about seeing, and then they would send you one and
it would sell on your coffee table for four months,
and then you'd think, I never really got around to
watching that, but I want to see the next thing
on my list, and you send it back without ever watching.
It was that just me, okay, good, I'm glad it
(02:59):
wasn't as me, um, I swear I'm going to see
the Prestige one day. Oh you should. I know, it's
a terrific film. It sat on my coffee table for
four months and that's it. That's it. That's a shame,
I know, I know. But anyway, they were strictly physical
media at first. In fact, for most of their their
existence if you look at the full timeline. Yeah, they
(03:20):
didn't even debut their watch instantly feature until two thousand seven,
and they did not provide unlimited streaming content until early
two tho Yeah, and two thousand seven, it was incredibly
limited and even two thousand eight when you look at
h This is one of those criticisms that are that
is often leveled by by people at Netflix, which is,
you know, I look at what you have available on
(03:42):
your DVD list, and then I look at what you
have available on your instant library list, and y'all, there's
stuff I want to watch that just like I can't
see on that instant side. And this is because there
are some really complex deals going on in the back
end between Netflix, which as a service provider, and the
content creators that make the content to Netflix. So Netflix
(04:07):
has to create and this is the same with other
services as well. They have to enter into these agreements
with various content creators to be able to broadcast stuff
over streaming, the same way that a cable channel would
license to content. Right now, in the case with the
cable company, a very similar anyway, very similar in the
(04:28):
case with the cable companies, they're looking at channels or
bundles of channels. So but with you know, with Netflix,
it might be it might be a little more pick
and choose. So instead of saying I want everything that
MTV produces when it comes to their original content. I
want every single show. It may be that I want
(04:49):
these five shows that MTV produces, but that's the only
five and the and in this case, those agreements can
go through the instead of a cable company, where it's
kind of an all or nothing proposition. UM services like
Netflix can enter into these agreements where they get certain
things but not other things. And in some cases it's
not necessarily uh to the benefit of Netflix. It might
(05:10):
be the key that the content creator says, you know,
this is my best stuff, and I want to make
uh my money going through the traditional broadcast or cable
route and then make more money through DVD sales whatever. Um,
I don't want to provide this to your subscribers. So
it's a very complicated dance that Netflix has to do
every time it's trying to get more content, and obviously,
(05:32):
from a consumer standpoint, you want there to be as
much content in whichever service you are subscribing to. Also,
to make matters even more complicated, there are issues about
what kind of content can be shown where So in
other words, if I'm a Netflix customer in Canada, the
options I have are different than the ones I would
(05:54):
have in the United states. If I were a customer
somewhere else in the world, and I would have that
same sort of issue, right. And that's again because all
of these licensing agreements are are very conditional. Yeah, some
of them are conditionally regionally. Some of them are conditional
based upon the type of equipment you're using to watch
something on. Right. I don't think Netflix has that issue
(06:15):
as much, but we will, but we will get into
that with some of our other discussions. Um. As often,
there are about twenty nine point eight million Netflix subscribers
in the US and another seven point six million worldwide, um,
which is which is up from twenty million at the
start of so and so. And you know, to another
(06:38):
judge of another way to judge how popular they are
based upon not just from a subscriber account, is how
much traffic Netflix generates on the interwebs, right, Um, supposedly
Netflix accounts for one third of streaming video on any
given day. Um. That's that's twice what YouTube does. Yah.
(07:00):
And keep in mind YouTube, Now, YouTube is generating content
at a crazy pace. We've talked about this. It's like
a hundred hours of content every minute. So every minute
that goes by another hundred hours worth of content gets
added to YouTube, but if you're looking at actual traffic
of people watching stuff, Netflix outstrips at three to one.
(07:21):
Now that might also be because a lot of the
content on Netflix is long form and a lot of
the content on YouTube is very short form, and Netflix
provides a lot more in HD. Yes, that's also true.
So uh. In other words, those file sizes are are
bigger for multiple reasons, not only because they are longer,
as in they last longer, like it's a thirty minute
(07:42):
show or twenty minute, but it's a larger file to
begin like exactly. Um as of November twelve, this accounted
for about a third of all US downstream traffic. Yeah,
this is uh. It's also why a lot of Internet
provider companies i sp s are staying to talk about caps. Yeah,
where they were, like especially initially when Netflix Instant was
(08:03):
starting off. Now, back then, there weren't as many customers
who were taking advantage of it. I would say that
this is something that's really starting to explode. Over the
last like maybe a year or two, we've really seen
it like take off. Before that, there were early adopters
who were very enthusiastic about it, and then there were
a few other people who were curious about it, and
some people had it, you know, added on as part
(08:24):
of their DVD service, and so they played with it
once or twice. Um now that one. I think. One
of the things Netflix did that they did really well
was they got their app on as many different platforms
as possible. It's one of the things I thought, this company,
they know what they're doing. They're on Xbox there on,
you know, PlayStation there on, we they're on you know, computers,
(08:44):
stay out, telephone and tablet use yeah, so smartphone anyway, exactly. Yeah,
so they like to call up and listen to my
favorite movies. Um No, they really were very savvy. They
got in front of as many eyeballs as possible, and
that definitely helped a lot. Now, I haven't always been
incredibly savvy. Back in back, you guys might remember, there
(09:06):
was the entire Quickster debacle and Netflix was just going
to become streaming only in a new company called Quickster
would be all the DVDs, and and that was after
another controversial thing where where they were um planning on
on splitting the DVD and streaming plans with like a
fifty over price Hike to to get both of them, um,
(09:29):
which was still I mean, because it had originally been
like ten bucks a month and it was going up
to like sixteen month bucks a month if you were
going to have both DVDs and streaming, and that one
they did push through. It almost makes me think that
they were joking about Quickster in order to make the
other things sound. I remember seeing Facebook explode when this happened,
and Twitch exploded to I had friends who were immediately
(09:50):
and vociferously proclaiming that they would leave Netflix, never to
return wherever, and burn the villages behind them, and so
the ground was salt, whereas I was the like, guys,
I think you might be overreacting like that sounds like
six dollars, but I mean, but stock fell from over
three hundred bucks to share to two under a hundred
(10:10):
and Read Hastings, the CEO, the founder of Netflix, apologized
publicly for it. He you know, this is not something
that happens very frequently where you have a CEO offer
up an apology. I mean Tim Cook did for Apple.
That's like the only other one I can think of
off the top of my head. So, um, you've had
you know, we've of course seen stories about CEO is
(10:32):
admitting that certain products in the company's past was were
possibly a mistake or badly handled. But this was an
outright apology to the public saying, you know, guys, um
I was thinking it was a great idea. I clearly
you guys feel differently. We are not going to do it,
so don't worry. Yeah, but that was that was a
big strike against Netflix at that point when they tried
(10:53):
to do the whole Netflix Quickster thing. Now, Netflix has
made some pretty big deals. Not all of them are
ex usive deals. I should say, we're gonna be talking
about some of the deals that they've made with various
content creators so that they can be allowed to show
certain types of content on their channels or on their service.
I should say, Uh. One of them, which was announced
(11:15):
the day that we are or I think two days
before we actually record this podcast, is an exclusive deal,
and that is that Netflix and the Weinstein Company or
Weinstein Company, depending on how you want to pronounce it,
announced that they are going to enter a multi year
premium pay TV window agreement in the United States starting
in TWI and that Netflix will become the quote exclusive
(11:37):
US subscription television service for first run films from the
Weinstein Company end quote. So this would include movies made
under TWC, the Weinstein Company and also Dimension Films, and
that would become available to Netflix members who are subscribed
to Netflix. So the interesting thing here to me is that, uh,
(11:58):
it is exclusive. That means you're not going to find
these same titles on the other services. Will be talking
about a little bit later. Uh. Now that's not the
only deal they've made recently. They made a big deal
with Disney. Yeah, so that agreement starts in seventeen. We're
talking long term goals here, folks. Now you might notice
(12:20):
that there are some Disney titles right, which was part
of this deal as well, but the larger percentage of
Disney films will be available beginning in twenty seventeen. Again
not necessarily exclusive, but they will be available on Netflix
and again depending upon where you are because these the
(12:40):
regional rules still are in effect here. Then you also
have the deal Netflix made with DreamWorks. Now, that agreement
begins inteen, so that's a little earlier, and we I
have already seen some Dreamwork stuff available there too, but
it's all kind of like they're second or third tier titles,
I would say, or sequel stiff movies that I like.
I would touch this, but I haven't seen the first
(13:01):
one and it's not available. Um, I'll have to wait
till I suppose or get a DVD subscription. Now you're
just talking crazy talk, all right. So Netflix, of course
is not the only one to make these deals, whether
they're exclusive or not, in order to get content. That's
kind of how the game is played, right sure. Sure,
And and and a lot of it is is kind of
being continually mixed up between these top three companies. There's
(13:24):
there's like, for example, I think Amazon just stole Downton
Abbey out from under Netflix. Um yeah, but like and
I think, for example, a Netflix had a deal with
Viacom for a while and then they're letting the deal
expire and they're not planning on renewing it. But other
services are going to definitely work with Viacom, so it's
it's gonna change over time. But there's something else that
(13:46):
all these companies are doing too, right, Yeah, And and
this is something that no one else certainly will have,
and that is Netflix's original content. Yeah, um, this is
and this is kind of a big deal because you know,
up until up until um none of these streaming service
on demand companies were creating their own new stuff. Right.
(14:06):
They were, they were a pipe, but they weren't creating
any of the stuff that was in the pipe. They
were just giving access to it. Um But but as
of February twelve, they they offered a show called Lily Hammer,
which was a co production with a Norwegian producer and
not that many people in the United States have probably
even heard of it, and it was pretty big in Norway.
But House of Cards came out. I don't have a
(14:29):
date on that, no, but well, House of Cards came
out I think either. I think House of Cards came
out late. And that was the first um us kind
of I'm not gonna say blockbuster, but um but but
the first popular original show. Right. And keep in mind
this was a remake of a show that was made
in the UK, but the US version had Kevin Spacey
in the lead role and that was a big which
(14:51):
is a big ya You're talking about an award winning
film actor playing a part in a series that was
doing something really friend. Now, what Netflix was doing was
not just producing this series, which would have been remarkable
all on its own, and then giving the exclusive look
at the series to its members. You could not watch
(15:12):
it anywhere else other than if you were to maybe
buy the DVD set, which you can do. But they
also offered up the entire series at one time, so
instead of telling you do you can just you know,
crunch through the entire series a day or two if
you want to just marathon it, you totally could because
the first season of it anyway, Yeah, first season of it.
(15:33):
So this was a big difference from the way we
usually because normally it's talking about something that's on a
regular basis, it might be serialized. Yeah. So Kevin Spacey
actually had something to say about this. I've got a
quote from him. He says, I'm not gonna do it.
Kevin Spacey, uh so much. Yeah, by the way, fantastic
(15:53):
impressionist Kevin Spacey. Anyway, So here's what he had to say. Clearly,
the success of the Netflix model releasing the entire season
of House of Cards it once proved one thing. The
audience wants the control, they want the freedom. If they
want to binge, as they've been doing on House of
Cards and lots of other shows, then we should let
them binge. I can't tell you how many people have
(16:13):
stopped me on the street and said thanks, you suck
three days out of my life. So but I mean,
that's that's an example of how this model worked. And
they followed that up with other examples like Arrested Development
season four YEP, which, by the way, I'm marathon when
it came out, Hemlock Groves, which I did not watch.
I have not watched any of that either, or in
(16:35):
Just The New Black, which I am currently I am
only not watching it right now because I don't even
know why. I'm surprised that I don't have it on
in the background. I just started watching it last night.
It's so good, guys. I've heard so many people tell
me that's really really good. I have not. I have
not started to watch it, but I've heard enough good
things about it that I'm I'm willing to give it
(16:55):
a shot. It is it is for mature audiences, or
for immature mature audiences, her, however you want to state
that not for kids, right? Not for kids. Let's let's
put it that way, because I am not mature, and
I thought you were just telling me that I couldn't
watch the show. Um uh, They've got upcoming shows from
from mickeyger Vas, Derek Um and since h from no
Wachowski siblings the Wakakis. Yeah, excellent. So you know that's
(17:19):
that's a big deal that this idea not only getting
these exclusive deals from other content creators, but to create
your own content. They're getting into this game. Uh. It's
interesting also because the way Netflix generates revenue is through subscriptions, right,
they don't they don't have ads in their shows and uh,
and we'll contrast that with some of the other stuff
that we'll talk about in a little bit. So there
(17:41):
are no ads and they're getting it mainly through subscriptions.
And from what I can tell, Netflix does not really
let anyone know how many people are watching any given
title necessarily unless it's say a huge deal and they'll say,
like over x million people watch this one thing right
there there, They're being pretty pretty under wraps about it. Yeah,
So that leads you to wonder is the content creation
(18:04):
business working for Netflix? Is that is that adding to
their bottom line? Are they getting more subscribers because of it?
I think that's what they're trying to figure out right now. Um,
you know they I I read something that said that
they could they can see themselves um doubling their current
content output UM in in the next couple of years
and even going up to twenty pretty soon. And they're
(18:25):
looking to get into a documentary production and stand up specials,
even even which are Spanish soaps. Hodgeman's ragnar Rock was
a Netflix exclusive, right, yeah, yeah, it was creative for them.
They're they're being compared to to HBO, Showtime, AMC, these
big cable heavy hitters um and uh. Ted Serrandos, the
chief content officer, told g Q in February, the goal
(18:48):
is to become HBO faster than HBO can become us. Wow,
that's interesting. That's a really good point because of course
HBO does have its own Hbo Go service, but you
have to be a subscriber through cable package in order
to access it. Yeah, you have to be a double subscriber, right,
you have to subscribe to cable and you have to
have a cable subscription that includes HBO in the first
(19:08):
place before you can have excess HBO Go. So yeah, yeah, yeah,
And it's really interesting. I mean, you know, the production process.
These shows are going from pitch to series with no
pilots in advance, UM, which is allowing Netflix to put
money into projects that they really believe in, rather than
playing the odds game of throwing up a single expensive
episode to see whether or not people like it. They
(19:29):
can they can really curate what they're putting out there. Yeah,
it's interesting. And also because they don't have to sell
it against ads, they don't have to worry about not
getting support from from ad from different other companies, for example,
for a show about women in prison that has a
largely female cast and deals with a lot of gender
issues as something that you probably wouldn't see on a
(19:49):
lot of traditional cable companies. So um and and it's
it's it's paying off in terms of critical acclaim. They
just got fourteen Emmy nominations for Original con tent. Yeah,
and that's, by the way, we should point out that
the this year, this is the first time we're starting
to see Emmy nominations for the series for for streaming
video for something that was not created by cable or broadcast.
(20:12):
So that's also very interesting. But but so we've got
two other companies to talk about. But before we do so,
let's take a quick break to thank our sponsor. Alright,
so we've covered Netflix from beginning to end thoroughly. I
think let's, uh, let's move on to a different one.
Let's talk about Hulu and Hulu Plus. All right, So,
um so, Hulu period and not. Hulu Plus launched in
(20:36):
two thousand eight. It was it was a joint effort
from NBC Universal and at that point News Corporation, you know,
Murdox Fox, Fox Corporation, UM, which which was interesting in
and of itself that these two major cable cable providers
were playing nice, We're joining forces to create something interesting.
(20:58):
I don't know you watched those Alec ball win spots
where he would he was convincing everyone that who was
really just a front for aliens to take over, And
I'm like, how is this supposed to sell me on watching?
I mean, I'm going to because now I got to
find out what happens in these commercials. But right right, yeah,
I know the commercials with him and Eliza Dick Shoo
did those are great. Hulu Plus launched in and that
(21:19):
was the subscription based end. Now, what's one thing that
says the Hulu and Hulu Plus apart from Netflix is
unlike Netflix, Hulu content is ad supported right right, UM.
And the deals that they make with the content providers UM.
Some of them are for for a straight licensing fee,
some of them are strictly ad revenue based, and some
(21:41):
of them are kind of a sticky gray area. Yes,
this gets super complicated just in one example here. So
you've got you've got shows that are to have ad
breaks in them, whether it's in the subscription one or
just the free version of the Hulu one. I believe
that all content has ads in it. Whether or not
(22:01):
the content creator gets a share of the ads is
the question. Got So that's that's very That's that's very
interesting all on its own. And then uh, on top
of that, you know, you have deals with content creators
that are different than the ones from the other two.
Like there there they have access to some content that
(22:22):
the other companies do not have access to. Sure and
and Hulu is UM if you're unfamiliar with the service,
is UM as opposed to Netflix, which has prior seasons
that have perhaps gone to DVD as an analog or
UM or films. Hulu does have a category of films,
but is I think most of its traffic is from
(22:42):
currently airing seasons of television either either the entire current
season to date or maybe the past five episodes, depending
on what again, what the licensing con So. So, for example,
a typical television show in the United States that also
is carried on Hulu, the a couple of days after
it airs on television, that episode could become available on
Hulu and you might be able to watch as many
(23:04):
as the last five for a lot of them. Right,
So let's say that I'm following, you know, ex television
show and I missed the last two episodes because I
was out of town. I could go on Hulu and
catch up and and what and you know, be back
up to speak. Or if you don't have a catal
subscription at all, and you could just watch it that
way and just tell all your friends to not talk
about the show for a couple of days so that
(23:26):
it gives you a chance to catch up. Um, and
if your friends are like mine, they will be happy
to post lots of fake spoilers on your Facebook, the
stuff that never happens, but that's okay. So but also
like Netflix, and besides that these deals that are being
made for content, Hulu is also in the content creation
(23:46):
business as well as uh, you know, we can talk
about some of the exclusives and some of the originals
as well. I guess some of the exclusives they have
all other exclusives are from other countries. Right, Almost five,
five or six percent of It's content are these exclusive
international television shows UM for example, Misfits or prem Face.
(24:06):
There's a Canadian drama called The Booth at the end.
It helped fund production for BBCs. The thick of it.
There's a whole bunch of Korean language dramas up there.
And and this is all because sometimes those international license
fees can be cheaper depending on what they are UM.
And and it's also you know, it's it's really smart
for on the content provider. And because I subscribed to
(24:30):
Hulu Plus because I could get Misfits. I wanted that show.
That was the only place I could get that show
other than ordering the DVDs, And so I did it.
See I the only two titles I even recognized all
of their exclusive list that I was just kind of
I was glancing at like a layout of a bunch
of their exclusives. The only two titles I recognized were Misfits.
(24:51):
Because you've talked about it before and moon Boy and
moon Boy because it has Christodaled in it. Okay, in
the I T crowd, so I knew about those. Crystal
Dowd plays the Imaginary Friend of a little Boy, so uh, yeah,
it's great, you know, fantastic stuff, but that was produced
in the UK and uh and Hulu is the the
(25:12):
exclusive provider in the U States. So yeah. Beyond that,
they also are creating their own content, including stuff like
The Awesome's which is a superhero comedy cartoon series. Right right.
They begin production of original stuff in August of eleven.
Um there their first show was an interview series by
(25:34):
Morgan Spurlock. Um early is when they grin their first
scripted show, Battleground. And I think that they are also
kind of trying to figure out where this original content
is going to fit into their business model. They're they're
kind of waiting to see, you know, whether people will
bite and how well it will do, and since they
are ad based, how that's going to affect everything. Not
(25:56):
to mention the fact that they are a branch of
these that are producing content on their own for other
platforms they're owned ABC. Disney is also part owner of
them at this point, and so yeah, how do you
how do you if you're creating content that's in direct
competition to owners content. Yeah, that's a problem, right, you're
(26:17):
talking about because now you're talking about there, they could
come up with an idea of saying, well, yeah, we
can create this for Hulu, but why don't we create
it for a different channel instead if we have that option,
or maybe they even start using Hulu as a testing
ground for stuff that they decide to then appropriate for television.
We don't know because it's so early on with this experiment,
(26:38):
really Hulu, but it is a little more complicated than Netflix.
Netflix is its own independent company that is not beholden
in this way to content creators. They're beholden in an
entirely different way. Like they will come to a content
creator and say I want that show, and then you
do not get this show because we want this show
to go somewhere else, not you. Yeah, and that's that's
not an interesting thing, is that there's a lot of
(27:00):
hour struggles going on in this entertainment world. No one
wants any of these services to become the dominant one
because then that service has leverage over the content creators.
So it's a constant chess battle right to see who
is going to be the one who has the advantage
in these negotiations. Yeah, this is part of why if if,
(27:21):
if you've tried to subscribe to Hulu, you may have
noticed that you cannot transfer all shows from your television
box to your laptop to your iPad. Um. Yeah, you
might have limitations it. Maybe that certain shows you can
only watch if you're watching it streaming to your TV
because some some content providers have said nope, yeah, thanks, no, thanks,
(27:42):
I don't want that on tablet. Yeah, you can't watch
that when you're on the train or whatever or driving
to work. Don't watch TV while you're driving. Don't do that.
Never do that. So so Hulu as of April had
uh four million subscribers, which is is has doubled in
the past year. It's still pretty shy of the thirty
million in the US that Netflix has, but's growing. All right.
(28:04):
So that's Hulu Plus and Hulu, we've we've covered that.
That leaves the other of the Big three, and that's
Amazon and Amazon. Again, like all three of these are
very different from each other. They have different approaches to
the way that they handle content. They have different approaches
the way that they handle revenue. With Amazon Prime Instant Video,
(28:25):
there are a couple of different things, like you can
have actual access to a certain portion of their television
shows and movies that are available if you're an Amazon
Prime member. That's a subscription based service that goes beyond
just instant Video, right right. It's not the same subscription
that you would get just for Hulu Plus or just
(28:45):
for Netflix. This is tied into its other Amazon Prime
shenanigans where you know, you get free or discounted chipping
and all discounts on certain goods and services and can
borrow kindle books, stuff like that. It's wrapped a laws
wrapped up into is what we're getting at. Yeah, yeah,
which is which is uh I think somewhere around seventy
five bucks a year. I think it's seventy nine totals.
(29:07):
So when you when you look at it, it actually
ends up being a little cheaper than some of the
other services on a monthly basis. Uh So in the
United States anyway, seventy nine per per years. Sure so
so Amazon Amazon Prime Instant Video launched in February eleven,
and you know you can also use it to rent
or buy titles separately. Right, So there's some titles that
(29:29):
are available for free viewing once you have this. About
about forty thou movies and television episodes are available with
the prescription UM subscription subscription why can't I say that
word today? Um? And and about something over a hundred
and fifty thousand titles are available per Yeah. If you
want to actually purchase stuff or rent stuff, yeah, and
(29:49):
I've done. I've done both. I rented titles through Amazon
Instant and I've purchased titles on Amazon Instant. So um.
And the way it works is if you're renting it,
if you have you know, you obviously need to watch
it on something. You could watch it on a computer
or tablet or in my case, I'm using a video
game console and I'm watching it through there. But if
(30:10):
you rent it, essentially once you start watching it, that
the timers on and you have a certain amount of
time to watch it before it gets uh bleated from
your your devices drive and you don't get to watch
it anymore. If you buy it, of course, it stays
in the cloud and you have the access to it
on whatever device as long as you're signed in as
you you can watch the programming. Right. Um, they also
(30:34):
have exclusive deals. Like I mentioned earlier, they had nabbed
down to Nabby from Netflix and they're starting something with Viacom.
They've invested in a CBS show called Under the Dome.
Um in exchange for a digital distribution, They've got exclusive
rights to digitally distribute the show four days after it
airs on network TV. Yeah. So this is similar to
kind of the way Hulu does things with some of
(30:55):
their shows, right where it airs on television and then
within a certain amount of time after word, depending upon
the agreement, Hulu can then show it on their service.
This is the same thing but on Amazon. Under the
Dome is based off a Stephen King story. Right. They
are also producing their own original content, say what yeah, yeah,
true factum. As of in fact, they unveiled Amazon Studios
(31:19):
and started collecting scripts from the public. They opened up
the process and we're just like, if you've got a
good script, send it to pit. If you have a pitch,
pitch it to us. And this is this is incredible.
It does I mean, it means that you're going to
get a lot of stuff, right, You're gonna get a
lot of stuff that's not ever going to be producible.
It's just gonna be things you read this like, this
(31:40):
might have been an interesting idea, but it's a terrible script,
or this is a good script, but it's boring. And
they took a certain number of those and and filmed
pilots of them, and in put those pilots online and
didn't use exclusively user feedback, but but kill that into account.
They they let the members of Amazon Prime watch them
(32:03):
and help decide what they wanted to see proceed to
a series. It's kind of a democratization of content creation,
sort of like what you would see if someone were
to pitch a series on say Kickstarter. People have pitched it,
they shot the pilots, they showed them off, and some
of them are now going to become actual series that
(32:23):
will be available probably late. I saw that in the
fall of is when we can expect to see the
first episodes of some of these shows. Right as of August,
they had Alpha House and also Beta's. Wait wait, wait, wait,
so they've got Alpha House and they have a show
called Beta's. I actually just got that. That's pretty silly
that happened. And these are two different shows. It's not
(32:45):
Alpha House in Beta's It's Alpha House, and then there's
another series called Beta's. I guess the last show will
ever see will be Omega. That will be the last
show that Amazon ever makes. And they've also got three
children series and production the names of which I do
not have in front of me. They were looking specifically
for comedies and kids shows. Well yeah, and and if
(33:05):
you if you look at the different series, a lot
of them have focused, especially recently on on children's programming,
on on on comedy and children's programs like Amazon's. Amazon's
deal with Viacom is largely based on children's programming from
things like Nickelodeon. Uh. Netflix has an entire section that's
(33:25):
just like they had Netflix for Kids that they launched
where you could create a little uh sub profile for
your children so that they could easily find content from
everyone from Disney to to Nickelodeon to I think Nickelodeon.
Maybe Nickelodeon didn't have anything. Viacom and Netflix did have
a deal, but like we said, they are letting that
deal uh uh end and they're not renewing. And also,
(33:48):
have you know less of the more colorful content pop
up in your kids video streams? Yes, yes, you don't
have to worry about, say, the hell Raisers series showing
up in sequence in there. I've been working my way
through them and my pain is delicious. So anyway, um, yes,
I just killed Lauren there. But yeah again, So we
(34:11):
we're seeing some more of these exclusive deals. We're seeing
some more of this, uh, this specific content created for
the platform. I love what Amazon is doing here as
far as creating a production studio and making it this
opportunity for people who I wouldn't necessarily have a voice otherwise, right,
they would have no way of getting into the industry,
(34:31):
and now there's a chance for them to actually create
something that could end up leading to a long career.
And you know, who knows, maybe the next fantastic storyteller,
maybe the next Josh Weeden is in this group, and
we can look forward to having his or her scripts
produced and canceled mid season. Well hope, hopefully this entire
(34:52):
this entire um strategy is going to avoid having things
like like cancelations mid season. See. That's the other thing
is that because of this approach, you no longer have
excuses like a network moving a show around in a
lineup over and over again. That now lineups mean nothing, right,
(35:13):
And you can also produce more than twenty four hours
a day of content or way less if that's what
you want to do, or if that's what you have
money to do, right, and you can produce far more
diverse content and uh and not have to worry about
catering to a specific audience with a bunch of themed content.
So that's one of the things we've seen with cable
(35:34):
channels where they struggle. They create an identity for themselves,
where they create very specific types of content that are
meant for a particular audience, but then they grow as
far as they can within that niche audience, and to
grow further means that they have to go outside that
definition sci fi. So uh, you know, this is something
(35:56):
that they don't these these companies don't necessarily have that problem.
They can experiment with doing stuff. You know, we've seen
with Netflix making drama and making horror as well as
making comedy with the fourth season of Arrested Development, Amazon's
doing it with children's programming, and this this alpha and
beta stuff. Hulu has got its own approach. It's I'm
really excited about this because I mean, I love stories
(36:19):
and I love the idea of people who otherwise would
not have had this content produced, having this shot. I
think it's really a great moment for someone who is
interested in consuming entertainment as well as people who want
to produce it. Absolutely. Yeah. I don't have a number
of the for for Prime members like like I did
for for Hulu and Netflix, because Amazon doesn't disclose that. Nope,
(36:41):
they just say millions. Yep, it's in the millions, lots
a bunch. I I do think it's pretty interesting that
Netflix transitioned its site to Amazon's cloud servers in so well,
you know, Amazon definitely does do the provide resources to
other companies that well, one of their biggest businesses that
(37:01):
doesn't have anything to do with the general consumer. I mean,
when it comes down to a business deal, I can
totally see them going, all right, you know, we're competing
against you, but if you're gonna give us money, that works. Um. Yeah.
And it's interesting too, I see that One of the
other notes you have here is about how Amazon is
expected to spend a billion dollars acquiring rights to programming
(37:23):
to show on their instant, which is half of what
Netflix is spending, which is so much money. Two billion dollars, folks,
that's just to get the content. See. So when you're
complaining and when I say you, I'm including myself in this,
when you're complaining that the show you really want to
watch is not available online, think of how much money
(37:44):
these companies are having to pay and just to get
you know. And it's because there's this complicated relationship between
the content creators and also cable companies and their relationship
to content creators. That's one of the reasons why you're
not going to find HBO in any of these for
the time being. HBO's deals they're tied down. Yeah, hbos
(38:05):
deal with cable companies is so important and so lucrative
that in order for HBO to break out of that
and leave the exclusivity of these cable deals would mean
that we would have to have an astronomically good deal
for HBO on streaming, because otherwise they're just losing money.
And you don't go into a business to lose money.
(38:27):
I would hope. I mean, it might happen to you,
but that's not why you get into business. Hypothetically, not
economic or the producers. I was going to say an
economic masochist, but yeah, maybe if you're if you're if
you're just trying to raise backing money and then immediately
tank the company so that you can keep the backing money,
you are not ethical, but you're also not really going
(38:50):
into business. All right, Well, do you have anything else
you want to say about these companies? Do not? All right, Well,
let's sign off on that. So if you guys have
any suggestions for future episodes of tech Stuff, whether it's
about a technology or some sort of trend in tech
or a specific company, let us know, send us a
message our email addresses tech Stuff at Discovery dot com,
(39:11):
or drop us a line on Facebook or Twitter. You
can find us there with the handle of tech Stuff H. S.
W and Lauren and I will talk to you again
really soon for more on this and thousands of other topics.
Does it how staff works dot Com
Get in touch with technology with tech Stuff from how
stuff works dot com. Hey there, and welcome to tech Stuff.
I'm Jonathan Strickland and I'm Lauren and today we're going
to talk about streaming video services, and really we're going
to focus on three big names in streaming video, knowing
that there are lots of other names out there, but
(00:27):
the three were specifically looking at. The three biggest as
of right now are really kind of sort of maybe
ish are Hulu plus Amazon Instant and Netflix, And keeping
in mind, will also talk a little bit about Hulu,
we'll talk a little bit about probably mentioned some of
the other services like iTunes obviously also has streaming and
(00:48):
Apple TV right, and there's so many different choices out there,
these were the big three. I mean, obviously if you
own something like um an Xbox three sixty, then you
also have stuff the Microsoft Video that you can buy
stuff or rent stuff on. Then there's also PlayStation and
Sony have a deal. So the Google TV is another example.
(01:10):
There are a lot of different technologies out there that
are all about streaming content over the Internet in your
television or computer. Even YouTube. You could argue, is is
that content provider? Oh sure, sure, I can. I view
YouTube all the time when I'm at home. There's this
great series I love to watch at home on my
big television. It's called Forward Thinking. It is amazing. The
(01:31):
host is uber uber Hut and so I watched that
all the time at home on my big television and
it's great. I mean, you know, it is filmed with
the red one, So so the I mean, yeah, actually
we upgraded to a four kN K to four K.
I mean they went from two K to four K.
So they're like, we said, a lot of different choices
(01:53):
out there, but let's focus on probably the I would
argue this is probably the most well known name. And
in the interest of full Disco, sure, we're gonna be
talking about Netflix. And Netflix has been one of our
sponsors in the past. They are one of our sponsors
for tech stuff. But we're just going to talk about
the way that it works and how it kind of started.
So if you look all the way back to nineteen seven,
(02:15):
that's when the company Netflix formed, and at that time
it was just kind of an idea. It hadn't even
there wasn't a business there yet. That was really kind
of the paperwork. So it was on paper. It wouldn't
be until nine that they actually launched a subscription DVD
mail to home plan plan. Yeah, they were offering up
(02:38):
rentals and sales, and but it was when the famous
subscription service came in, that idea where you would make
up a list of DVDs that you were really excited
about seeing, and then they would send you one and
it would sell on your coffee table for four months,
and then you'd think, I never really got around to
watching that, but I want to see the next thing
on my list, and you send it back without ever watching.
It was that just me, okay, good, I'm glad it
(02:59):
wasn't as me, um, I swear I'm going to see
the Prestige one day. Oh you should. I know, it's
a terrific film. It sat on my coffee table for
four months and that's it. That's it. That's a shame,
I know, I know. But anyway, they were strictly physical
media at first. In fact, for most of their their
existence if you look at the full timeline. Yeah, they
(03:20):
didn't even debut their watch instantly feature until two thousand seven,
and they did not provide unlimited streaming content until early
two tho Yeah, and two thousand seven, it was incredibly
limited and even two thousand eight when you look at
h This is one of those criticisms that are that
is often leveled by by people at Netflix, which is,
you know, I look at what you have available on
(03:42):
your DVD list, and then I look at what you
have available on your instant library list, and y'all, there's
stuff I want to watch that just like I can't
see on that instant side. And this is because there
are some really complex deals going on in the back
end between Netflix, which as a service provider, and the
content creators that make the content to Netflix. So Netflix
(04:07):
has to create and this is the same with other
services as well. They have to enter into these agreements
with various content creators to be able to broadcast stuff
over streaming, the same way that a cable channel would
license to content. Right now, in the case with the
cable company, a very similar anyway, very similar in the
(04:28):
case with the cable companies, they're looking at channels or
bundles of channels. So but with you know, with Netflix,
it might be it might be a little more pick
and choose. So instead of saying I want everything that
MTV produces when it comes to their original content. I
want every single show. It may be that I want
(04:49):
these five shows that MTV produces, but that's the only
five and the and in this case, those agreements can
go through the instead of a cable company, where it's
kind of an all or nothing proposition. UM services like
Netflix can enter into these agreements where they get certain
things but not other things. And in some cases it's
not necessarily uh to the benefit of Netflix. It might
(05:10):
be the key that the content creator says, you know,
this is my best stuff, and I want to make
uh my money going through the traditional broadcast or cable
route and then make more money through DVD sales whatever. Um,
I don't want to provide this to your subscribers. So
it's a very complicated dance that Netflix has to do
every time it's trying to get more content, and obviously,
(05:32):
from a consumer standpoint, you want there to be as
much content in whichever service you are subscribing to. Also,
to make matters even more complicated, there are issues about
what kind of content can be shown where So in
other words, if I'm a Netflix customer in Canada, the
options I have are different than the ones I would
(05:54):
have in the United states. If I were a customer
somewhere else in the world, and I would have that
same sort of issue, right. And that's again because all
of these licensing agreements are are very conditional. Yeah, some
of them are conditionally regionally. Some of them are conditional
based upon the type of equipment you're using to watch
something on. Right. I don't think Netflix has that issue
(06:15):
as much, but we will, but we will get into
that with some of our other discussions. Um. As often,
there are about twenty nine point eight million Netflix subscribers
in the US and another seven point six million worldwide, um,
which is which is up from twenty million at the
start of so and so. And you know, to another
(06:38):
judge of another way to judge how popular they are
based upon not just from a subscriber account, is how
much traffic Netflix generates on the interwebs, right, Um, supposedly
Netflix accounts for one third of streaming video on any
given day. Um. That's that's twice what YouTube does. Yah.
(07:00):
And keep in mind YouTube, Now, YouTube is generating content
at a crazy pace. We've talked about this. It's like
a hundred hours of content every minute. So every minute
that goes by another hundred hours worth of content gets
added to YouTube, but if you're looking at actual traffic
of people watching stuff, Netflix outstrips at three to one.
(07:21):
Now that might also be because a lot of the
content on Netflix is long form and a lot of
the content on YouTube is very short form, and Netflix
provides a lot more in HD. Yes, that's also true.
So uh. In other words, those file sizes are are
bigger for multiple reasons, not only because they are longer,
as in they last longer, like it's a thirty minute
(07:42):
show or twenty minute, but it's a larger file to
begin like exactly. Um as of November twelve, this accounted
for about a third of all US downstream traffic. Yeah,
this is uh. It's also why a lot of Internet
provider companies i sp s are staying to talk about caps. Yeah,
where they were, like especially initially when Netflix Instant was
(08:03):
starting off. Now, back then, there weren't as many customers
who were taking advantage of it. I would say that
this is something that's really starting to explode. Over the
last like maybe a year or two, we've really seen
it like take off. Before that, there were early adopters
who were very enthusiastic about it, and then there were
a few other people who were curious about it, and
some people had it, you know, added on as part
(08:24):
of their DVD service, and so they played with it
once or twice. Um now that one. I think. One
of the things Netflix did that they did really well
was they got their app on as many different platforms
as possible. It's one of the things I thought, this company,
they know what they're doing. They're on Xbox there on,
you know, PlayStation there on, we they're on you know, computers,
(08:44):
stay out, telephone and tablet use yeah, so smartphone anyway, exactly. Yeah,
so they like to call up and listen to my
favorite movies. Um No, they really were very savvy. They
got in front of as many eyeballs as possible, and
that definitely helped a lot. Now, I haven't always been
incredibly savvy. Back in back, you guys might remember, there
(09:06):
was the entire Quickster debacle and Netflix was just going
to become streaming only in a new company called Quickster
would be all the DVDs, and and that was after
another controversial thing where where they were um planning on
on splitting the DVD and streaming plans with like a
fifty over price Hike to to get both of them, um,
(09:29):
which was still I mean, because it had originally been
like ten bucks a month and it was going up
to like sixteen month bucks a month if you were
going to have both DVDs and streaming, and that one
they did push through. It almost makes me think that
they were joking about Quickster in order to make the
other things sound. I remember seeing Facebook explode when this happened,
and Twitch exploded to I had friends who were immediately
(09:50):
and vociferously proclaiming that they would leave Netflix, never to
return wherever, and burn the villages behind them, and so
the ground was salt, whereas I was the like, guys,
I think you might be overreacting like that sounds like
six dollars, but I mean, but stock fell from over
three hundred bucks to share to two under a hundred
(10:10):
and Read Hastings, the CEO, the founder of Netflix, apologized
publicly for it. He you know, this is not something
that happens very frequently where you have a CEO offer
up an apology. I mean Tim Cook did for Apple.
That's like the only other one I can think of
off the top of my head. So, um, you've had
you know, we've of course seen stories about CEO is
(10:32):
admitting that certain products in the company's past was were
possibly a mistake or badly handled. But this was an
outright apology to the public saying, you know, guys, um
I was thinking it was a great idea. I clearly
you guys feel differently. We are not going to do it,
so don't worry. Yeah, but that was that was a
big strike against Netflix at that point when they tried
(10:53):
to do the whole Netflix Quickster thing. Now, Netflix has
made some pretty big deals. Not all of them are
ex usive deals. I should say, we're gonna be talking
about some of the deals that they've made with various
content creators so that they can be allowed to show
certain types of content on their channels or on their service.
I should say, Uh. One of them, which was announced
(11:15):
the day that we are or I think two days
before we actually record this podcast, is an exclusive deal,
and that is that Netflix and the Weinstein Company or
Weinstein Company, depending on how you want to pronounce it,
announced that they are going to enter a multi year
premium pay TV window agreement in the United States starting
in TWI and that Netflix will become the quote exclusive
(11:37):
US subscription television service for first run films from the
Weinstein Company end quote. So this would include movies made
under TWC, the Weinstein Company and also Dimension Films, and
that would become available to Netflix members who are subscribed
to Netflix. So the interesting thing here to me is that, uh,
(11:58):
it is exclusive. That means you're not going to find
these same titles on the other services. Will be talking
about a little bit later. Uh. Now that's not the
only deal they've made recently. They made a big deal
with Disney. Yeah, so that agreement starts in seventeen. We're
talking long term goals here, folks. Now you might notice
(12:20):
that there are some Disney titles right, which was part
of this deal as well, but the larger percentage of
Disney films will be available beginning in twenty seventeen. Again
not necessarily exclusive, but they will be available on Netflix
and again depending upon where you are because these the
(12:40):
regional rules still are in effect here. Then you also
have the deal Netflix made with DreamWorks. Now, that agreement
begins inteen, so that's a little earlier, and we I
have already seen some Dreamwork stuff available there too, but
it's all kind of like they're second or third tier titles,
I would say, or sequel stiff movies that I like.
I would touch this, but I haven't seen the first
(13:01):
one and it's not available. Um, I'll have to wait
till I suppose or get a DVD subscription. Now you're
just talking crazy talk, all right. So Netflix, of course
is not the only one to make these deals, whether
they're exclusive or not, in order to get content. That's
kind of how the game is played, right sure. Sure,
And and and a lot of it is is kind of
being continually mixed up between these top three companies. There's
(13:24):
there's like, for example, I think Amazon just stole Downton
Abbey out from under Netflix. Um yeah, but like and
I think, for example, a Netflix had a deal with
Viacom for a while and then they're letting the deal
expire and they're not planning on renewing it. But other
services are going to definitely work with Viacom, so it's
it's gonna change over time. But there's something else that
(13:46):
all these companies are doing too, right, Yeah, And and
this is something that no one else certainly will have,
and that is Netflix's original content. Yeah, um, this is
and this is kind of a big deal because you know,
up until up until um none of these streaming service
on demand companies were creating their own new stuff. Right.
(14:06):
They were, they were a pipe, but they weren't creating
any of the stuff that was in the pipe. They
were just giving access to it. Um But but as
of February twelve, they they offered a show called Lily Hammer,
which was a co production with a Norwegian producer and
not that many people in the United States have probably
even heard of it, and it was pretty big in Norway.
But House of Cards came out. I don't have a
(14:29):
date on that, no, but well, House of Cards came
out I think either. I think House of Cards came
out late. And that was the first um us kind
of I'm not gonna say blockbuster, but um but but
the first popular original show. Right. And keep in mind
this was a remake of a show that was made
in the UK, but the US version had Kevin Spacey
in the lead role and that was a big which
(14:51):
is a big ya You're talking about an award winning
film actor playing a part in a series that was
doing something really friend. Now, what Netflix was doing was
not just producing this series, which would have been remarkable
all on its own, and then giving the exclusive look
at the series to its members. You could not watch
(15:12):
it anywhere else other than if you were to maybe
buy the DVD set, which you can do. But they
also offered up the entire series at one time, so
instead of telling you do you can just you know,
crunch through the entire series a day or two if
you want to just marathon it, you totally could because
the first season of it anyway, Yeah, first season of it.
(15:33):
So this was a big difference from the way we
usually because normally it's talking about something that's on a
regular basis, it might be serialized. Yeah. So Kevin Spacey
actually had something to say about this. I've got a
quote from him. He says, I'm not gonna do it.
Kevin Spacey, uh so much. Yeah, by the way, fantastic
(15:53):
impressionist Kevin Spacey. Anyway, So here's what he had to say. Clearly,
the success of the Netflix model releasing the entire season
of House of Cards it once proved one thing. The
audience wants the control, they want the freedom. If they
want to binge, as they've been doing on House of
Cards and lots of other shows, then we should let
them binge. I can't tell you how many people have
(16:13):
stopped me on the street and said thanks, you suck
three days out of my life. So but I mean,
that's that's an example of how this model worked. And
they followed that up with other examples like Arrested Development
season four YEP, which, by the way, I'm marathon when
it came out, Hemlock Groves, which I did not watch.
I have not watched any of that either, or in
(16:35):
Just The New Black, which I am currently I am
only not watching it right now because I don't even
know why. I'm surprised that I don't have it on
in the background. I just started watching it last night.
It's so good, guys. I've heard so many people tell
me that's really really good. I have not. I have
not started to watch it, but I've heard enough good
things about it that I'm I'm willing to give it
(16:55):
a shot. It is it is for mature audiences, or
for immature mature audiences, her, however you want to state
that not for kids, right? Not for kids. Let's let's
put it that way, because I am not mature, and
I thought you were just telling me that I couldn't
watch the show. Um uh, They've got upcoming shows from
from mickeyger Vas, Derek Um and since h from no
Wachowski siblings the Wakakis. Yeah, excellent. So you know that's
(17:19):
that's a big deal that this idea not only getting
these exclusive deals from other content creators, but to create
your own content. They're getting into this game. Uh. It's
interesting also because the way Netflix generates revenue is through subscriptions, right,
they don't they don't have ads in their shows and uh,
and we'll contrast that with some of the other stuff
that we'll talk about in a little bit. So there
(17:41):
are no ads and they're getting it mainly through subscriptions.
And from what I can tell, Netflix does not really
let anyone know how many people are watching any given
title necessarily unless it's say a huge deal and they'll say,
like over x million people watch this one thing right
there there, They're being pretty pretty under wraps about it. Yeah,
So that leads you to wonder is the content creation
(18:04):
business working for Netflix? Is that is that adding to
their bottom line? Are they getting more subscribers because of it?
I think that's what they're trying to figure out right now. Um,
you know they I I read something that said that
they could they can see themselves um doubling their current
content output UM in in the next couple of years
and even going up to twenty pretty soon. And they're
(18:25):
looking to get into a documentary production and stand up specials,
even even which are Spanish soaps. Hodgeman's ragnar Rock was
a Netflix exclusive, right, yeah, yeah, it was creative for them.
They're they're being compared to to HBO, Showtime, AMC, these
big cable heavy hitters um and uh. Ted Serrandos, the
chief content officer, told g Q in February, the goal
(18:48):
is to become HBO faster than HBO can become us. Wow,
that's interesting. That's a really good point because of course
HBO does have its own Hbo Go service, but you
have to be a subscriber through cable package in order
to access it. Yeah, you have to be a double subscriber, right,
you have to subscribe to cable and you have to
have a cable subscription that includes HBO in the first
(19:08):
place before you can have excess HBO Go. So yeah, yeah, yeah,
And it's really interesting. I mean, you know, the production process.
These shows are going from pitch to series with no
pilots in advance, UM, which is allowing Netflix to put
money into projects that they really believe in, rather than
playing the odds game of throwing up a single expensive
episode to see whether or not people like it. They
(19:29):
can they can really curate what they're putting out there. Yeah,
it's interesting. And also because they don't have to sell
it against ads, they don't have to worry about not
getting support from from ad from different other companies, for example,
for a show about women in prison that has a
largely female cast and deals with a lot of gender
issues as something that you probably wouldn't see on a
(19:49):
lot of traditional cable companies. So um and and it's
it's it's paying off in terms of critical acclaim. They
just got fourteen Emmy nominations for Original con tent. Yeah,
and that's, by the way, we should point out that
the this year, this is the first time we're starting
to see Emmy nominations for the series for for streaming
video for something that was not created by cable or broadcast.
(20:12):
So that's also very interesting. But but so we've got
two other companies to talk about. But before we do so,
let's take a quick break to thank our sponsor. Alright,
so we've covered Netflix from beginning to end thoroughly. I
think let's, uh, let's move on to a different one.
Let's talk about Hulu and Hulu Plus. All right, So,
um so, Hulu period and not. Hulu Plus launched in
(20:36):
two thousand eight. It was it was a joint effort
from NBC Universal and at that point News Corporation, you know,
Murdox Fox, Fox Corporation, UM, which which was interesting in
and of itself that these two major cable cable providers
were playing nice, We're joining forces to create something interesting.
(20:58):
I don't know you watched those Alec ball win spots
where he would he was convincing everyone that who was
really just a front for aliens to take over, And
I'm like, how is this supposed to sell me on watching?
I mean, I'm going to because now I got to
find out what happens in these commercials. But right right, yeah,
I know the commercials with him and Eliza Dick Shoo
did those are great. Hulu Plus launched in and that
(21:19):
was the subscription based end. Now, what's one thing that
says the Hulu and Hulu Plus apart from Netflix is
unlike Netflix, Hulu content is ad supported right right, UM.
And the deals that they make with the content providers UM.
Some of them are for for a straight licensing fee,
some of them are strictly ad revenue based, and some
(21:41):
of them are kind of a sticky gray area. Yes,
this gets super complicated just in one example here. So
you've got you've got shows that are to have ad
breaks in them, whether it's in the subscription one or
just the free version of the Hulu one. I believe
that all content has ads in it. Whether or not
(22:01):
the content creator gets a share of the ads is
the question. Got So that's that's very That's that's very
interesting all on its own. And then uh, on top
of that, you know, you have deals with content creators
that are different than the ones from the other two.
Like there there they have access to some content that
(22:22):
the other companies do not have access to. Sure and
and Hulu is UM if you're unfamiliar with the service,
is UM as opposed to Netflix, which has prior seasons
that have perhaps gone to DVD as an analog or
UM or films. Hulu does have a category of films,
but is I think most of its traffic is from
(22:42):
currently airing seasons of television either either the entire current
season to date or maybe the past five episodes, depending
on what again, what the licensing con So. So, for example,
a typical television show in the United States that also
is carried on Hulu, the a couple of days after
it airs on television, that episode could become available on
Hulu and you might be able to watch as many
(23:04):
as the last five for a lot of them. Right,
So let's say that I'm following, you know, ex television
show and I missed the last two episodes because I
was out of town. I could go on Hulu and
catch up and and what and you know, be back
up to speak. Or if you don't have a catal
subscription at all, and you could just watch it that
way and just tell all your friends to not talk
about the show for a couple of days so that
(23:26):
it gives you a chance to catch up. Um, and
if your friends are like mine, they will be happy
to post lots of fake spoilers on your Facebook, the
stuff that never happens, but that's okay. So but also
like Netflix, and besides that these deals that are being
made for content, Hulu is also in the content creation
(23:46):
business as well as uh, you know, we can talk
about some of the exclusives and some of the originals
as well. I guess some of the exclusives they have
all other exclusives are from other countries. Right, Almost five,
five or six percent of It's content are these exclusive
international television shows UM for example, Misfits or prem Face.
(24:06):
There's a Canadian drama called The Booth at the end.
It helped fund production for BBCs. The thick of it.
There's a whole bunch of Korean language dramas up there.
And and this is all because sometimes those international license
fees can be cheaper depending on what they are UM.
And and it's also you know, it's it's really smart
for on the content provider. And because I subscribed to
(24:30):
Hulu Plus because I could get Misfits. I wanted that show.
That was the only place I could get that show
other than ordering the DVDs, And so I did it.
See I the only two titles I even recognized all
of their exclusive list that I was just kind of
I was glancing at like a layout of a bunch
of their exclusives. The only two titles I recognized were Misfits.
(24:51):
Because you've talked about it before and moon Boy and
moon Boy because it has Christodaled in it. Okay, in
the I T crowd, so I knew about those. Crystal
Dowd plays the Imaginary Friend of a little Boy, so uh, yeah,
it's great, you know, fantastic stuff, but that was produced
in the UK and uh and Hulu is the the
(25:12):
exclusive provider in the U States. So yeah. Beyond that,
they also are creating their own content, including stuff like
The Awesome's which is a superhero comedy cartoon series. Right right.
They begin production of original stuff in August of eleven.
Um there their first show was an interview series by
(25:34):
Morgan Spurlock. Um early is when they grin their first
scripted show, Battleground. And I think that they are also
kind of trying to figure out where this original content
is going to fit into their business model. They're they're
kind of waiting to see, you know, whether people will
bite and how well it will do, and since they
are ad based, how that's going to affect everything. Not
(25:56):
to mention the fact that they are a branch of
these that are producing content on their own for other
platforms they're owned ABC. Disney is also part owner of
them at this point, and so yeah, how do you
how do you if you're creating content that's in direct
competition to owners content. Yeah, that's a problem, right, you're
(26:17):
talking about because now you're talking about there, they could
come up with an idea of saying, well, yeah, we
can create this for Hulu, but why don't we create
it for a different channel instead if we have that option,
or maybe they even start using Hulu as a testing
ground for stuff that they decide to then appropriate for television.
We don't know because it's so early on with this experiment,
(26:38):
really Hulu, but it is a little more complicated than Netflix.
Netflix is its own independent company that is not beholden
in this way to content creators. They're beholden in an
entirely different way. Like they will come to a content
creator and say I want that show, and then you
do not get this show because we want this show
to go somewhere else, not you. Yeah, and that's that's
not an interesting thing, is that there's a lot of
(27:00):
hour struggles going on in this entertainment world. No one
wants any of these services to become the dominant one
because then that service has leverage over the content creators.
So it's a constant chess battle right to see who
is going to be the one who has the advantage
in these negotiations. Yeah, this is part of why if if,
(27:21):
if you've tried to subscribe to Hulu, you may have
noticed that you cannot transfer all shows from your television
box to your laptop to your iPad. Um. Yeah, you
might have limitations it. Maybe that certain shows you can
only watch if you're watching it streaming to your TV
because some some content providers have said nope, yeah, thanks, no, thanks,
(27:42):
I don't want that on tablet. Yeah, you can't watch
that when you're on the train or whatever or driving
to work. Don't watch TV while you're driving. Don't do that.
Never do that. So so Hulu as of April had
uh four million subscribers, which is is has doubled in
the past year. It's still pretty shy of the thirty
million in the US that Netflix has, but's growing. All right.
(28:04):
So that's Hulu Plus and Hulu, we've we've covered that.
That leaves the other of the Big three, and that's
Amazon and Amazon. Again, like all three of these are
very different from each other. They have different approaches to
the way that they handle content. They have different approaches
the way that they handle revenue. With Amazon Prime Instant Video,
(28:25):
there are a couple of different things, like you can
have actual access to a certain portion of their television
shows and movies that are available if you're an Amazon
Prime member. That's a subscription based service that goes beyond
just instant Video, right right. It's not the same subscription
that you would get just for Hulu Plus or just
(28:45):
for Netflix. This is tied into its other Amazon Prime
shenanigans where you know, you get free or discounted chipping
and all discounts on certain goods and services and can
borrow kindle books, stuff like that. It's wrapped a laws
wrapped up into is what we're getting at. Yeah, yeah,
which is which is uh I think somewhere around seventy
five bucks a year. I think it's seventy nine totals.
(29:07):
So when you when you look at it, it actually
ends up being a little cheaper than some of the
other services on a monthly basis. Uh So in the
United States anyway, seventy nine per per years. Sure so
so Amazon Amazon Prime Instant Video launched in February eleven,
and you know you can also use it to rent
or buy titles separately. Right, So there's some titles that
(29:29):
are available for free viewing once you have this. About
about forty thou movies and television episodes are available with
the prescription UM subscription subscription why can't I say that
word today? Um? And and about something over a hundred
and fifty thousand titles are available per Yeah. If you
want to actually purchase stuff or rent stuff, yeah, and
(29:49):
I've done. I've done both. I rented titles through Amazon
Instant and I've purchased titles on Amazon Instant. So um.
And the way it works is if you're renting it,
if you have you know, you obviously need to watch
it on something. You could watch it on a computer
or tablet or in my case, I'm using a video
game console and I'm watching it through there. But if
(30:10):
you rent it, essentially once you start watching it, that
the timers on and you have a certain amount of
time to watch it before it gets uh bleated from
your your devices drive and you don't get to watch
it anymore. If you buy it, of course, it stays
in the cloud and you have the access to it
on whatever device as long as you're signed in as
you you can watch the programming. Right. Um, they also
(30:34):
have exclusive deals. Like I mentioned earlier, they had nabbed
down to Nabby from Netflix and they're starting something with Viacom.
They've invested in a CBS show called Under the Dome.
Um in exchange for a digital distribution, They've got exclusive
rights to digitally distribute the show four days after it
airs on network TV. Yeah. So this is similar to
kind of the way Hulu does things with some of
(30:55):
their shows, right where it airs on television and then
within a certain amount of time after word, depending upon
the agreement, Hulu can then show it on their service.
This is the same thing but on Amazon. Under the
Dome is based off a Stephen King story. Right. They
are also producing their own original content, say what yeah, yeah,
true factum. As of in fact, they unveiled Amazon Studios
(31:19):
and started collecting scripts from the public. They opened up
the process and we're just like, if you've got a
good script, send it to pit. If you have a pitch,
pitch it to us. And this is this is incredible.
It does I mean, it means that you're going to
get a lot of stuff, right, You're gonna get a
lot of stuff that's not ever going to be producible.
It's just gonna be things you read this like, this
(31:40):
might have been an interesting idea, but it's a terrible script,
or this is a good script, but it's boring. And
they took a certain number of those and and filmed
pilots of them, and in put those pilots online and
didn't use exclusively user feedback, but but kill that into account.
They they let the members of Amazon Prime watch them
(32:03):
and help decide what they wanted to see proceed to
a series. It's kind of a democratization of content creation,
sort of like what you would see if someone were
to pitch a series on say Kickstarter. People have pitched it,
they shot the pilots, they showed them off, and some
of them are now going to become actual series that
(32:23):
will be available probably late. I saw that in the
fall of is when we can expect to see the
first episodes of some of these shows. Right as of August,
they had Alpha House and also Beta's. Wait wait, wait, wait,
so they've got Alpha House and they have a show
called Beta's. I actually just got that. That's pretty silly
that happened. And these are two different shows. It's not
(32:45):
Alpha House in Beta's It's Alpha House, and then there's
another series called Beta's. I guess the last show will
ever see will be Omega. That will be the last
show that Amazon ever makes. And they've also got three
children series and production the names of which I do
not have in front of me. They were looking specifically
for comedies and kids shows. Well yeah, and and if
(33:05):
you if you look at the different series, a lot
of them have focused, especially recently on on children's programming,
on on on comedy and children's programs like Amazon's. Amazon's
deal with Viacom is largely based on children's programming from
things like Nickelodeon. Uh. Netflix has an entire section that's
(33:25):
just like they had Netflix for Kids that they launched
where you could create a little uh sub profile for
your children so that they could easily find content from
everyone from Disney to to Nickelodeon to I think Nickelodeon.
Maybe Nickelodeon didn't have anything. Viacom and Netflix did have
a deal, but like we said, they are letting that
deal uh uh end and they're not renewing. And also,
(33:48):
have you know less of the more colorful content pop
up in your kids video streams? Yes, yes, you don't
have to worry about, say, the hell Raisers series showing
up in sequence in there. I've been working my way
through them and my pain is delicious. So anyway, um, yes,
I just killed Lauren there. But yeah again, So we
(34:11):
we're seeing some more of these exclusive deals. We're seeing
some more of this, uh, this specific content created for
the platform. I love what Amazon is doing here as
far as creating a production studio and making it this
opportunity for people who I wouldn't necessarily have a voice otherwise, right,
they would have no way of getting into the industry,
(34:31):
and now there's a chance for them to actually create
something that could end up leading to a long career.
And you know, who knows, maybe the next fantastic storyteller,
maybe the next Josh Weeden is in this group, and
we can look forward to having his or her scripts
produced and canceled mid season. Well hope, hopefully this entire
(34:52):
this entire um strategy is going to avoid having things
like like cancelations mid season. See. That's the other thing
is that because of this approach, you no longer have
excuses like a network moving a show around in a
lineup over and over again. That now lineups mean nothing, right,
(35:13):
And you can also produce more than twenty four hours
a day of content or way less if that's what
you want to do, or if that's what you have
money to do, right, and you can produce far more
diverse content and uh and not have to worry about
catering to a specific audience with a bunch of themed content.
So that's one of the things we've seen with cable
(35:34):
channels where they struggle. They create an identity for themselves,
where they create very specific types of content that are
meant for a particular audience, but then they grow as
far as they can within that niche audience, and to
grow further means that they have to go outside that
definition sci fi. So uh, you know, this is something
(35:56):
that they don't these these companies don't necessarily have that problem.
They can experiment with doing stuff. You know, we've seen
with Netflix making drama and making horror as well as
making comedy with the fourth season of Arrested Development, Amazon's
doing it with children's programming, and this this alpha and
beta stuff. Hulu has got its own approach. It's I'm
really excited about this because I mean, I love stories
(36:19):
and I love the idea of people who otherwise would
not have had this content produced, having this shot. I
think it's really a great moment for someone who is
interested in consuming entertainment as well as people who want
to produce it. Absolutely. Yeah. I don't have a number
of the for for Prime members like like I did
for for Hulu and Netflix, because Amazon doesn't disclose that. Nope,
(36:41):
they just say millions. Yep, it's in the millions, lots
a bunch. I I do think it's pretty interesting that
Netflix transitioned its site to Amazon's cloud servers in so well,
you know, Amazon definitely does do the provide resources to
other companies that well, one of their biggest businesses that
(37:01):
doesn't have anything to do with the general consumer. I mean,
when it comes down to a business deal, I can
totally see them going, all right, you know, we're competing
against you, but if you're gonna give us money, that works. Um. Yeah.
And it's interesting too, I see that One of the
other notes you have here is about how Amazon is
expected to spend a billion dollars acquiring rights to programming
(37:23):
to show on their instant, which is half of what
Netflix is spending, which is so much money. Two billion dollars, folks,
that's just to get the content. See. So when you're
complaining and when I say you, I'm including myself in this,
when you're complaining that the show you really want to
watch is not available online, think of how much money
(37:44):
these companies are having to pay and just to get
you know. And it's because there's this complicated relationship between
the content creators and also cable companies and their relationship
to content creators. That's one of the reasons why you're
not going to find HBO in any of these for
the time being. HBO's deals they're tied down. Yeah, hbos
(38:05):
deal with cable companies is so important and so lucrative
that in order for HBO to break out of that
and leave the exclusivity of these cable deals would mean
that we would have to have an astronomically good deal
for HBO on streaming, because otherwise they're just losing money.
And you don't go into a business to lose money.
(38:27):
I would hope. I mean, it might happen to you,
but that's not why you get into business. Hypothetically, not
economic or the producers. I was going to say an
economic masochist, but yeah, maybe if you're if you're if
you're just trying to raise backing money and then immediately
tank the company so that you can keep the backing money,
you are not ethical, but you're also not really going
(38:50):
into business. All right, Well, do you have anything else
you want to say about these companies? Do not? All right, Well,
let's sign off on that. So if you guys have
any suggestions for future episodes of tech Stuff, whether it's
about a technology or some sort of trend in tech
or a specific company, let us know, send us a
message our email addresses tech Stuff at Discovery dot com,
(39:11):
or drop us a line on Facebook or Twitter. You
can find us there with the handle of tech Stuff H. S.
W and Lauren and I will talk to you again
really soon for more on this and thousands of other topics.
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TechStuff News
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Karah Preiss
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