> The free online television service has become one of the most-watched online video properties in the U.S. and a top earner of web-video ad dollars since its 2008 launch. > > []() > > But its owners—industry powerhouses NBC Universal, News Corp. and Walt Disney Co.—are increasingly at odds over Hulu’s business model. Worried that free Web versions of their biggest TV shows are eating into their traditional business, the owners disagree among themselves, and with Hulu management, on how much of their content should be free. > > []() > > Fox Broadcasting owner News Corp. and ABC owner Disney are contemplating pulling some free content from Hulu, say people familiar with the matter. The media companies are also moving to sell more programs to Hulu competitors that deliver television over the Internet, including Netflix Inc., Microsoft Corp. and Apple Inc. I had my worries about Hulu from the start, mostly because it was owned by a network (NBC). Never underestimate the power of a network executive to screw the customers.

In all seriousness, though, I think it was an unfair advantage, owning a significant chunk of content that you could then hold back from other competing services.

Two things that surprised me about Hulu’s success: First, the fact that people were willing to watch TV on their computer screens only. (When introduced, Hulu was strictly computer-only—there was no TV streaming option of any kind.) This continues to boggle my mind. The idea that you have a 42″ plasma tv in the living room, but you’re going to watch shows on a 15″ laptop with crappy speakers. Where’s the logic in that?

Second, the fact that it was ad-sponsored. The ads surprised me because I honestly thought people would not want to sit through ads anymore. (This was supposed to be a re-invention of TV, not a rehash of the old system.) Certainly, a dollar or two per episode was a better option than sitting though boring ads, right?

More importantly, I thought there was no way the ads on an Internet service would come close to making up for the difference in ad revenue on network television. In other words, as more people flocked to Hulu and ditched their traditional Cable TV viewing, the networks were going to lose money and figure out that web ads weren’t enough. Web ads are literally worth pennies vs. TV’s six-figure ad buys. The business model was not sustainable long-term.

That second part seems to be coming true. (Admittedly, I was wrong about the first. People really are freetards, when you get right down to it.) So now millions of Hulu users are going to be bait-and-switched into some new version of the service that costs them in some way. I wonder if they’ll be smart enough to revolt, or if they’ll just start coughing up the cash to feed their addiction?

I’m sure NBC will find some way to make the service completely unusable for everyone.

> Microsoft will reportedly announce a new Windows-based $200 set-top box using Windows Media Center as its primary interface, according to the [ > *Seattle Times* > ](http://seattletimes.nwsource.com/html/businesstechnology/2013824940_brier03.html). The company, which has been trying to put a Windows box in living rooms for more than 10 years with little success, is expected to make the announcement during the Consumer Electronics Show in Las Vegas. I can’t believe that Microsoft’s strategy this year is going to be a box running Windows. Again.

When is someone going to fire Ballmer?

And the comparison here shouldn’t be Microsoft TV vs. Google TV. Both products are DOA. The set-top box battle is closer to Roku vs. Apple TV, but even in that case it’s way too early for anyone to have full success with this kind of product.

Jobs wasn’t wrong when he said that this category is never going to be a blockbuster market until someone kills the cable companies. That’s not going to be easy. And whoever does it is either going to have to partner with or buy Netflix.

> Wu estimates that about 40 percent of downloads from the App Store for the iPhone and iPad are games, and he believes that games could be a major selling point for the Apple TV. > > “This capability isn’t available today, but we believe it could be added fairly easily as Apple TV uses a similar A4 processor architecture as the iPhone, iPad and iPod touch,” Wu said. Analysts like Wu are always making this assumption that touch screen games that work on the iPhone or iPod Touch could just magically work on the Apple TV. They still don’t get the massive difference between touching a screen directly and touching a controller that then moves things on a screen across the room. These are not even close to similar experiences.

The only way games on the Apple TV could work would be if developers developed games to specifically work with the Apple TV. Which means Apple would need to give developers a whole new SDK, simulator, etc. It would take months of development, and there wouldn’t be the benefit the iPad had of simply being able to run native iPhone apps at double resolution as a stop gap measure.

I’m not saying apps on the Apple TV won’t happen, but people like Wu constantly make it sound easier than it is. Or they assume that Apple would allow the Apple TV to just play native iPhone apps, giving us a user experience as crappy as the Google TV. I wouldn’t bet on that.

Update: Also, don’t forget that most of the successful games on iOS are casual, get-in-and-get out type games. The kinds of games you play while waiting in line at the supermarket. Casual games that can be stopped and started on a dime. Traditional TV console games, on the other hand, are more geared toward sitting down for a few hours and immersing yourself in a game for a while with no interruptions. Very different kinds of games.

AND the best iOS games are also the ones that take advantage of the touch screen, rather than trying to force the touch screen into a virtual D-pad or joystick. Games like Angry Birds work so well on a touch screen because you actually pull back the slingshot itself with your finger. Or games like Tilt-to-Live, or the many driving games where you tilt the device itself to steer. These work far better than simple ports of PSP or DS games. Using an iPhone or an iPad merely as a controller to a game that is being played on a big screen TV is actually a step DOWN from PS3 or XBox consoles, where you get the benefits of real buttons that you don’t need to look at as much.

> **Sony’s price slashing promotion for its new Blu-Ray Google TV appliance indicates additional trouble for the Android-based device, following a content blockade imposed by television broadcasters, a rash of unenthusiastic reviews, and the fragmentation issues endemic to Android.** > > Sony announced a promotional $100 price cut on its $399 Google TV device, an unusually deep discount for a brand new product, especially for Sony. While the company offered a variety of Black Friday discounts on other Blu-Ray products, none approached the 25 percent off fire sale of its new Google TV box. > > Sony’s combination Blu-Ray and Google TV device was just introduced last month, making the slashed price an indication that the devices weren’t garnering much attention despite the media attention focused on Google TV and its use of Android. As *TechCrunch*[observed](http://techcrunch.com/2010/11/27/google-tv-already-in-trouble-sony-offering-25-off-blu-ray-google-tv-units/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29), “this doesn’t look so well for Google’s living room takeover plans.” Funny, I don’t see many deep discounts on AppleTVs this year.

With the shift internally to the YouTube Division, the TV networks blocking almost all content, and now this steep discount, I’d say it’s just about time to add Google TV to the list of Google’s recent failures. Here’s the list, for those keeping score:

Nexus One

Wave

Buzz

Google TV

Hard to imagine any other company of this size making that many high profile mistakes in such a short span of time.

> But none of the other options we’ve tested have felt as simple, solid, and easy to use as the new Apple TV. Putting content concerns aside (which admittedly is difficult to do), the Apple TV has a lot going for it. The video and audio quality of the Apple TV is to be lauded, the company *is* making a lot of high quality titles available right off the bat, sharing from your current computers is a snap, and if you’re a Netflix user, the inclusion here is perfectly seamless. The question is ultimately about ease versus options — right now it’s hard to whole-heartedly recommend the Apple TV even at its $99 price point given the thin list of partners Apple has courted. If you just want a dead simple movie rental box and you’re not that picky about content, the Apple TV is a no-brainer. If, like us, you’re looking for options good enough to make you can the cable, Apple’s new box still feels a lot like a hobby. As I’ve mentioned about a bazillion times before, Apple TV’s biggest issue is something Apple can’t fix: content.

The reviews for the new version are going to all sound pretty much like Engadet’s here. They’re going to love the device, love the interface, and hate the fact that there is not enough content in the iTunes store.

The part I find odd is that other than the $99 price tag and the inclusion of Netflix, there’s nothing the new Apple TV can do that the old one couldn’t; in fact, the old one was actually a MORE capable device. Yet everyone slammed that one for years as a poor effort. Apple literally took features away, did the bare minimum to get a cheaper version out, and the press rewarded them for it. Buyers will as well, I suspect.

It’s mostly about that $99 of course. The “what the hell” price, as my friend Webomatica likes to put it. And that’s okay with me. I just wish people would admit that they’re cheapskates.

So Apple TV remains a hobby, albeit a hobby that is more likely now to generate some revenue for Apple. Perhaps they’ll finally start giving us sales stats. That’s when you’ll know whether or not this cheap price scheme was a success.

Maybe a larger installed base will give Apple a better bargaining position with the content owners, too. But I’m not holding my breath.

> Google Android evangelist Tim Bray responded to Case’s concerns in a [post](http://android-developers.blogspot.com/2010/08/licensing-server-news.html) on Google’s official Android blog. He says that the sample verification code supplied with the LVL framework wasn’t really intended to be used unmodified. Because it was created to demonstrate how to use the framework, it was deliberately written with an emphasis on simplicity rather than robustness. Bray also contends that the sample applications compromised by Case didn’t use robust code obfuscation, which would have made it considerably more difficult to compromise the software. > > “The licensing service provides infrastructure that developers can use to write custom authentication checks for each of their applications. The first release shipped with the simplest, most transparent imaginable sample implementation, which was written to be easy to understand and modify, rather than security-focused,” Bray wrote. “Some developers are using this sample as-is, which makes their applications easier to attack. The attacks we’ve seen so far are also all on applications that have neglected to obfuscate their code, a practice that we strongly recommend. We’ll be publishing detailed instructions for developers on how to do this.” > > Bray’s points suggest that LVL offers more effective protection when it is used properly and developers don’t just copy and paste Google’s contrived example validation code, but he also acknowledged that the framework is not mature yet and still has room for improvement. Same old story from the Google evangelists: “Nothing is our fault. Everything is your fault.”

This, I believe, is yet another reason why developers are not flocking to Google. And I’m not convinced Google cares.

Essentially, what Google is saying to developers is the same thing it has always said: Everything is your responsibility. If you want security in your apps, build it yourself. We’ll hand you some sample code, but the heavy lifting is up to you. We don’t care if people pirate your intellectual property. As long as they click on ads.

Understand, Tim Bray is a key spokesperson for Google, not some low-level idiot with a Twitter account. And he literally said that the security code for Android “was written to be easy to understand and modify, rather than security-focused.” The security is not security-focused?

And people still take Android seriously?

Whatever you may think about the future of mobile technology, I can assure you that security is going to be THE issue in a couple of years. Hackers are already starting to target all the major mobile platforms; Google is handing them the keys instead of installing new locks.

Apple, in stark contrast, locks down the security of iOS so hard that it often gets criticized for being a complete control freak. And that is probably true, but still. At least as a user, I get the sense that they care a little about me.

I’m not a developer (though I do some work for one), but when given the choice between a security protocol that’s baked into the platform that I essentially get for free (minus a few hassles), and one that I have to create myself from scratch—that’s a pretty easy financial decision.

This notion that Google is going to sell a billion Android phones and then suddenly a market for software will appear is complete craziness. And as I said before, I don’t think Google even cares. They want ads, and ads in apps are proving very ineffective, anyway. What Google really wants is to drive everyone to the browser again, which is clearly not what the users want.

So again, someone remind me how Google is supposed to win this battle in the long run? They are poised to be the least cohesive, most insecure platform with the least appealing apps. And their phones aren’t even cheaper than the competition. So where’s the world domination part come in?

> Even with the refresh, Jobs isn’t convinced the new version will be a mainstream hit, says the person familiar with Apple’s plans,” Burrows wrote. “Most consumers aren’t ready to cut the cord on their cable company, or put up with the tech-nastics required to stream content from the iTunes collection on their PC to their living room big-screen TV. This story in Bloomberg has all the trademarks of an Apple leak to the press to temper expectations.

The mistake people keep making when analyzing the merging of traditional home entertainment with computers is in thinking that this is a technology problem that somehow Apple, Google, Netflix, etc. haven’t been able to solve. That’s ridiculous. Apple could design a perfect TV/Movie experience in its sleep.

And it’s not, as the quote above suggests, that people aren’t ready to “cut the cord on the cable company”. Most people I know would jump at the chance to stop paying for crappy cable service. I already have.

The problem is the content. Cable operators have tremendous influence over the content owners, and they want no part of this revolution. They want to charge people $100 a month for cable indefinitely. They have absolutely no interest in releasing their stranglehold on your favorite TV shows. Not to Apple. Not to Google. Not to anyone.

It’s about money.

It’s very similar to the situation we have now with the Energy business. All the money is in Oil, and all the players have a vested interest in selling oil until the very last drop is gone. So solar, wind, nuclear, hydro stand little chance of getting anywhere fast.

My good friend at Webomatica mentioned in his blog this week that his television viewing experience since he dropped cable is fraught with confusion, technical issues, etc. But notice that his suggested solution is right on the money: It’s not that any one of his different devices doesn’t work well; it’s that he needs four different devices and services just to get all the content he wants. He doesn’t want cable back: he wants one box that does everything without being a slave to cable.

People are ready for this revolution. They just don’t have adequate resources to make it happen. And neither does any one tech company. This will take years of chipping away at the wall.

Change will happen; the TV revolution will happen. Just not in early September, no matter what Apple announces. It will be another step forward, as the original Apple TV was a step forward, the Roku Box was a step forward, the Tivo was a step forward, etc. But Jobs is right; Apple has no more power than any other tech company to crack this nut.