Who doesn’t like Hulu.  As a fan of user interface design, I enjoy the elegance and simplicity of the site almost as much as the video streams themselves.  Launched in 2007 as a joint venture between NBCU and News Corp. (Fox/Paramount), the service has since grown to offer streams from many other content owners as well (recently Disney signed on, and is also reportedly planning to become an equity stakeholder).

It’s good to see such cooperative forward thinking be rewarded with success – but that same success brings its own set of challenges :

Boxee Attend a few panels and you’ll find a surprising number of folks in the industry that still don’t grasp the profoundly disruptive impact all the “lean-back” internet video CE hardware expected to hit the market in the next few years will have.  Instead, most still equate internet video with a single viewer sitting at a computer.  Hulu owners NBCU and Fox/Paramount, though, appear to get it: when it recently became clear that a relatively minuscule number of early-adopter types out there were using boxee software to get hulu streams onto their televisions, the two parent companies summarily instructed their ambitious offspring hulu to shut it down ASAP.  The sense of regret in the hulu press release was palpable – rightfully proud of the elegant platform hulu had built, CEO Jason Kilar lamented that it was sometimes necessary to “do hard things” such as deny boxee access.

Thus began a technical arms race between hulu and the scrappy NYC startup, as boxee implemented workaround after workaround only to have hulu thwart each one.  Where does is stand now?  While the initial concept of boxee was to get away from the web browser, the latest beta version of boxee will include fully Mozilla (Firefox)-compliant browser functionality – for the sole purpose of making it more difficult for hulu to detect whether a given stream request is coming from a solitary worker catching up on 30 Rock while eating lunch at her desk or from a group of those pesky early-adopting boxee users sitting on the couch (I attended the boxee event where this feature was announced, and wrote a bit about it here).

YouTube An even larger challenge for hulu is YouTube, which has some big plans to move into the premium content aggregation space (I’ve been writing about that for a while now, both here and here).  In fact, the entire YouTube site is currently in the midst of some major revisions, the goal of which make YouTube as much of a go-to destination for premium long-form content as it already is for 3-minute clips of water-skiing squirrels (while the service’s motto is still “Broadcast Yourself”, look for that to change soon!).  So while the YouTube “Channels” have been available for premium content partners for a while now (a bit on that here), a recent post by YouTube’s owner Google promises at least two new premium content tabs:

• A “Subscription” tab – although not yet implemented, this could offer internet video via a subscription-based pricing model not available on either hulu or iTunes (which offers only micro-payment pricing).  This could be a very interesting development – I doubt Google would go to the trouble of implementing this without some agreements already in place (more on that here). As CEO Eric Schmidt puts it, “We do expect over time to see micropayments and other forms of subscription models coming.”
• A “Show” tab – this tab is already active, although the implementation is perhaps incomplete: as yet, the tab does not include references to shows otherwise available on the YouTube Channels (for example, while episodes of “Scrubs” are available via the newly-enhanced ABC Channel, they’re absent on the Show tab screen shown below).

Also notable in the Google announcement are planned partnerships with Sony Pictures and hulu-holdout CBS (to get an idea of how things have changed, CBS is a spin-off of Viacom, which settled a long and bitter lawsuit with YouTube just last year).

Why is this especially challenging for hulu?  According to Nielsen, in March YouTube delivered almost 16 times the number of streams hulu did, and had just over 11 times the number of unique viewers – that’s one serious tail-wind for YouTube as they enter the premium content space.

In Conclusion Clearly, hulu has to be concerned about YouTube.  But to the extent the viewer is interested in full episodic television content, the advantage still goes to  hulu: while YouTube will offer the CBS content that hulu lacks, don’t look for Viacom (Comedy Central, MTV) or Fox content on YouTube any time soon – and while NBC gives YouTube a few short clips, don’t look for full episodes of the Office on YouTube any time soon, either.  Moreover, the YouTube user interface is (subjectively, at least) still a work in progress, and much less inviting than the more polished hulu interface.

The real elephant in the room, though, is getting these streams to the television.  There are several CE-based solutions in development right now (Zillion TV, Yahoo Connected TV, TiVo Search) that each include their own content aggregation services complete with user interfaces optimized for a 10 ft. (rather than 2ft.) viewing experience – an environment in which the traditional keyboard/mouse/web browser paradigm would be inappropriate anyway.  What the Boxee situation tells us is that hulu’s content-owning equity stakeholders would appear to prefer partnering with the CE hardware-related aggregation services directly – and that they view the hulu platform as necessarily limited to the computer.

For now, at least…

As a hulu fan, though, I have to admit it would be a shame if the much-awaited TV-internet convergence does finally happen someday and such a well-designed platform is left stranded on your laptop’s web browser.