From Wikipedia:

Hulu is an upcoming online video on demand service that is also expected to offer video sharing. The service is a joint venture of NBC Universal and News Corp. Providence Equity Partners has also made a USD$100 million equity investment and holds a 10% stake in the company. The partnership was announced in March 2007[3] and the name "Hulu" was chosen in late August, when the website went live. The service is expected to offer full-length episodes of NBC and FOX television programs while also accepting user-submitted videos in direct competition with YouTube.

The problem with Hulu is that it requires consumers to watch the shows using their proprietary player, online. From all I've read so far, it does not appear that you could watch the shows offline if you chose, as you can now with show purchased on iTunes. I watch my iTune purchased shows in Quicktime Player.

I was all set to buy an iPod so I could watch episodes of "Dateline--To Catch a Predator" on a 2.5" screen at $1.99 a shot, but at $4.99 I'll just have to suffer watching it on my 47" LCD for free.

Why do I have the feeling this will come back and bite the Peacock on the ass?

Although revenues from online video downloads are not trivial, I think the real target of Apple's action is not NBC but Universal Music.

Music download is the major business of iTunes and Universal Music has not been playing nicely with iTunes recently. By making an example of NBC, Apple is sending a message that it can play hardball and do the same to Universal Music if it so chooses. I will be interested in seeing how that relationship evolves in this new context.

Did NBC Universal go out of its way to attract the morons they've got running the place, or did all the smart guys figure out that television is a dinosaur well on its way to the tarpits and bailed out, leaving the idiots in charge? iTunes is one of the few growth areas left in the content delivery business, with network ratings on the skids, DVD sales having reached a plateau and CD sales plummeting. As a content creator, you'd think they'd have sense enough to team up with and suck up to Apple, not aggravate them - especially given NBC's anemic ratings.

The really funny thing about all of this is that Apple's Steve Jobs sits on Disney's board and runs a company that has billions in cash lying around. Is it really wise to piss this guy off? Apple could easily launch itself into the content creation business, either by starting its own studio, by teaming with another major or by buying some existing indie. Given their track record - and their wads of cash - they'd probably have no trouble attracting the talent it would take to produce several quality series right off the bat, the kind of stuff that consumers would be more than willing to pay $2 a pop for. Within 5 years Apple could be the HBO of the Internet, making hundreds of millions of dollars in pure profit a year off of their own content on their own network, all without the massive amount of dead weight dinosaurs like NBC Universal are obviously dragging around with them.

Content providers have had about a decade now to figure out what consumers want and how to deliver that over the Internet. They still don't seem to get it, and it's looking more and more like they never will. Apparently they think they're too big to fail, and that nobody else can do what they do. I think they're sailing thru iceberg laden waters and headed straight for disaster.

My advice? Warm up the band.

NBC should be smarter than this. There is a very small market for video downloads, right now, even amongst the 18-35 age group. Didn't a survey out this week say only about 12% of that population has even bought a video in the last month?

What NBC fails to realize is Apple's price point - while doing little for their current bottom line - is the only thing keeping legal downloading alive right now. Raise the price to $4.99 for an episode of The Office and no one, repeat, no one will pay for it. Frankly, not even Heroes is worth that price.

Do the math -- at that rate, the box set of an average TV show's season would cost $110 retail (at 22 episodes per season). Double the cost for the privilege of downloading? What are they smoking over there at NBC?

I'm not super happy that it's accepted that now "people will have to go the free, file-sharing route for NBC's shows".

You do not HAVE to watch these shows on the computer. You can watch them on TV! or you can not watch them at all.

By going the "free, file-sharing route", you are DECIDING to commit piracy (or whatever you choose to call it), not being forced into it.

Perhaps you think this is just semantics -- and really, I do know what you mean. However, I think it is an important distinction between "having to" and "choosing to". A better way to put it is that people are LIKELY to go the free, file-sharing route.

There is no obligation to watch NBC shows, and definitely no obligation to watch NBC shows on your computers.

You are behind the times, Ryan. Very few of the tech-savvy individuals I know actually watch television show video files on a computer screen. I have a computer system set up right now under my HDTV that plays anything I send to it in full 1080p. What is the difference between this and watching a recorded show on my cable company's DVR box, which is incidentally connected to the same tv? In fact, my cable co's DVR box actually records shows digitally in a format similar to that available on Bittorrent sites, and I can even install a driver which will allow me to download the recorded shows off of the cable box to play on the computer right next to it! Lines are blurring far faster than the old farts at NBC apparently realize.

I pay for overpriced HD service that nets me a wopping 12 extra channels just so I can record my favorite shows in HD with the DVR (monthly rental=$3.99). Every few shows, the DVR totally screws up a recording, dropping audio or corrupting the picture. I then simply go to Bittorrent to download an HD rip of the same show. If this is illegal, I think we really need to reexamine the laws as they currently stand. Sure, I could wait for a re-run, but that's quite a wait during the regular season.

Of course, there's no obligation to watch any of these shows, but I don't think I'm really overreaching in the above scenario. It is absolutely mind boggling that content producers are still so resistant to change that they will actually remove a legal option for the consumer because they want to make more money, even as far better options already exist and have existed for quite a while now. You don't have to make your content free to compete with Bittorrent. You just have to offer a reasonable option in terms of price, quality, and availability.

I remember waiting for music companies to launch their own download services during Napster's heyday. How many years and untold millions spent on litigation has it taken them to offer us the current confusing, expensive and DRM-laden systems? I sure hope the TV industry doesn't follow the same route, because they will have lost me for good. I welcome the current illicit distribution systems available on the internet, if only because they offer us a constant reminder of how much better things could actually get once the last generation simply dies off and allows a younger generation of executives to add some balance to the marketplace.