Online Video Steven Kippel on 01 May 2012

Hulu may require cable subscription authentication

Hulu may require cable subscription authentication

With all this talk about cutting the cable subscription out of our lives for good, the cable conglomerates seem to be trying to claw back some of that business. The New York Post has reported that Hulu may require users to authenticate their accounts to prove they’re a paying TV subscriber of cable or satellite.

This change would follow a larger trend asking for consumers to authenticate their subscriptions. Recently, NCAA March Madness was available online only to cable subscribers. Cable operators have also been pushing a new model that would provide “TV Everywhere” (as Comcast calls it) as long as you pay for your cable subscription on top of your internet package. Comcast is expected to use this model with the upcoming Olympic Games, and they’re in talks with media providers such as Fox to bring more content to TV Everywhere.

The cable operators are very powerful forces holding natural monopolies in many markets. They’ve been lobbying Congress to allow them to throttle certain web content to the end user, or sell these channels as an add on deal to the internet. Over the past decade, cable operators have been quickly turning into internet service providers while the cable subscriptions have been fading. Instead of adapting to the new reality, they’re trying to hold onto their cable profits and also take internet profits.

Time Warner Cable and Comcast have asked to sell tiers of service where basic internet is one price, but accessing unlimited streams of video from Hulu or Netflix would be premium services much like HBO, Starz and Showtime are for cable television. There has been immense consumer push back on that idea, not to mention from Silicon Valley who sees it as a way to squash innovation and kill upstart companies. This new move to require authentication seems like a backdoor approach, requiring their subscribers to pay for a cable service they otherwise wouldn’t get in order to receive the content over the internet that is also available on cable television.

I don’t want to seem alarmist. All of the inside sources indicate this migration for Hulu would take years to implement, and then may only provide different levels of service – perhaps providing TV shows just after air date for authenticated subscribers, and a longer wait time for unauthenticated subscribers.

Hulu is a joint partnership between NBCUniversal (owned by Comcast), News Corporation (parent of Fox), The Walt Disney Company (parent of ABC), and Providence Equity Partners. Providence Equity Partners has asked the other partners to purchase their shares for $200 million recently. While the buyout of NBC by Comcast came with restrictions concerning Hulu, the negotiating between content providers and cable operators has grown increasingly tense in the previous several years as subscriber fees have fallen and content owners ask for greater retransmission payments while ad revenue is also falling.

Business requires risk, and these companies are simply looking to minimize risk. Of course they could just put pilot seasons on Kickstarter and fund new show development off of niche audiences (seriously, if that happens I hope I get my royalties).

3 Responses to “Hulu may require cable subscription authentication”

  1. on 01 May 2012 at 10:33 AM 1.Wesley Novack said …

    This trend of requiring pay TV authentication is the suck. If Hulu does implement this and it downgrades the availability of otherwise “free content”, then I can see it leading to more people using illegitimate sources for their online content consumption.

  2. on 01 May 2012 at 3:15 PM 2.Chris Parke said …

    This is a bummer since I pay $0 for cable and just use netflix and hulu to stream through my xbox 360.

    Think they’ll move to an online only pricing for streaming people?

  3. on 02 May 2012 at 6:51 AM 3.Wesley Novack said …

    Chris, I doubt the big Cable Co’s will offer an online only subscription at a decent monthly rate. They don’t want to offer an alternative that is more attractive than their legacy dinosaur subscription service.

    Hoping that someone, somewhere starts an a la carte online channel subscription service somewhere. If that happens, consumers will flock to it, but again, we’ll have to deal with the fallout as the Cable Co’s implement bandwidth usage caps at the internet service level.

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