Home Is Fox Throttling Hulu With New Authentication Program?

Is Fox Throttling Hulu With New Authentication Program?

Fox is striking a blow to free premium content by instituting an “authentication program” where the network’s cable and satellite partners will have an exclusive eight-day window for Fox programs before they are made available to the Web. This means that users will have to be “verified subscribers” (paying customers) to see Fox shows during the eight-day window of exclusivity.

Dish Network (through Dishonline.com) Hulu and Fox.com are the first partners announced and will be able to have new Fox, starting August 15. In the case of Hulu, that means that users will have to subscribe to Hulu Plus to view new Fox shows online. It is the first time that user verification has been applied to content from any of the major networks and is reminiscent of the 28-day window that the film studious (of which Fox is one) have implemented on renting or streaming new film releases in order to boost DVD sales. Will ABC and NBC, the other two networks partnered with Hulu, follow suit? What will the impact be on the video streaming service going forward?

The immediate reaction is that Fox is hamstringing Hulu by putting around a third of its content behind a verification wall. On Twitter, the reaction is just about the same as was seen when Netflix announced its new pricing structure: “f**k Fox and f**k Hulu.” Really, users do not like it when companies start messing with business models they have come to rely on, especially if they were once free.

Fox could be harming Hulu if there is a large user revolt where customers start cancelling subscriptions or boycotting the service entirely. The question for Fox is: what is more valuable, the extra eyeballs that see Hulu’s premium advertisements or the subscription revenues of Hulu Plus? Essentially, it is the same question that newspapers have been dealing with in terms of pay walls for the last 10 years.

It will be interesting to see if NBC Universal and Disney’s ABC follow. If Fox, which has a say on the Hulu board where NBC does not (because of the Comcast’s takeover), bullied its way into this arrangement, the other two networks cannot be happy about it. Competitors make strange bedfellows. It is an odd move for Fox to announce while speculation of who might buy Hulu is rampant across the Web as the content wall could have a detrimental affect on the overall value of the service.

In the end, it comes down to the nature of the Hulu consortium. It has three network lions, working in cohort by wary of each other’s presence within a cage. Is this a step that Fox can take with NBC and ABC or will it be the trigger that sets them at each other’s throats?

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