Wednesday, June 30, 2010

Hulu Doesn't Understand Millennials: Why Hulu Plus Fails

Lately I feel like such a cynic. It's not my fault - honestly. It's the fact that major media companies can't seem to get it right when trying to connect with Millennials. From the big networks that own Hulu to record labels the trend seems to be taking old ad-based revenue models and trying to find ways to draw masses of people.

It's not just a problem of communicating product benefits, it's a fundamental failure to service unmet Millennial needs at the business model level. If you can't do that no amount of advertising will save your business.

Here's a few insights for advertisers seeking to connect their brand to this massive group of consumers (60 Million strong in the US alone. Source - Mintel):

Relying on Advertisers to Pay the Bills
Major media companies like NBC, Universal and Fox are still of the mindset that they should make money by creating video content and charging advertisers for placements. One problem: Millennials (and many others) don't respond to traditional advertising. Hulu may boast better response rates than television, but the margins are still too slim to support the costs of delivering streaming video to millions of viewers.

Mobility as an Afterthought
Many brands are guilty of a lackluster mobile offering: duplicating the web experience on mobile devices with no added benefits (often the opposite). Hulu plans to make the same content available via iPhone, iPad and others, but with little extra. Hulu mobile needs to be a comprehensive and proactive service to be compelling to Millennials. How about mobile alerts sent to your phone the second your favorite shows become available for viewing? Perhaps creating a mobile ad platform that requires advertisers to offer truly unique deals and discounts to opt-in subscribers.

Still No Social
The closest Hulu gets to a social experience is rating shows or sharing via email. This isn't enough - and certainly not for $10.00 per month. To survive and thrive Hulu must adopt comprehensive social technologies as part of the core experience. Chat rooms for shows, scheduling your own broadcast lineups for you and your friends to watch simultaneously as well as a mechanism to invite anyone through Facebook, Twitter, etc..., VoIP through Hulu (or through a partner like Skype) to share the experience of watching your favorite shows together. Those are just a few concepts that would be irresistible to Millennials and it took me all of 3 minutes to think of them.

Getting Everyone on Board
With networks like HBO, Showtime and Comedy Central clearly not on board with Hulu the result is viewers still have to hunt and peck around the web to find other shows they like. If Hulu can't get Comedy Central on board at least provide a sort of "universal web TV Guide" that links to or notifies Plus subscribers of exactly where and when an official web video goes live. Better yet - just do what it takes to get the real content on Hulu, in one place, so subscribers can get what they want, when they want it. Millennials demand instant gratification - remove that and you create one more point of friction.

Hulu Plus: Not Better Than Pirate Bay
When it comes down to the basics - and this is a subject that remains hidden in much of the commentary - Hulu plus isn't better than downloading shows from a Torrent search engine. These days most television shows (and even 18 Gigabyte Blu-ray movies) are readily available for download at no charge and in extremely high quality. You can take them anywhere, watch them on any device and keep them for life. Yes, it's technically illegal, but we haven't seen any real backlash from broadcasters or ISPs as of yet. The point isn't to advocate piracy. It's to give Hulu a reality check - why would Millennials pay for something they are getting free elsewhere?

Let's talk about implications for the agencies and developers creating rich advertising content for services like Hulu. Be warned - your clients' days may be limited by their inability to connect with the very group that should be bringing them the most revenue. Competitor services that understand Millennials are out there and growing. Without substantial change in the service offering, Hulu has a high potential for failure in the next two years.

Nick Kinports (follow him on Twitter @ADMAVEN) has worked in the interactive technology world for over 9 years, and helps the Fortune 100 identify unmet consumer needs, create ideas to fill those needs, and bring them into market. He currently works at Maddock Douglas.
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