An overview of how Hulu operates.

You can watch network television shows, movies, and video clips at any time from anywhere in the U.S. using Hulu's free online video service. Access content at Hulu.com or through distribution partners like AOL, MySpace, and Yahoo! Hulu offers professional-grade videos from over 150 providers such as Fox, NBC Universal, Sony Pictures Television, Warner Brothers, and Disney [source: Kilar]. Enjoy recent sketches from "Saturday Night Live," or catch up on over 1,000 current primetime series like "House" and "The Colbert Report," classic TV shows like "The Partridge Family," or blockbusters like "Ghostbusters."

Launched on March 12, 2008, by NBC Universal and News Corporation, Hulu has continuously expanded its list of content providers. By the end of 2008, Hulu had surpassed 200 million video views. One year later, Hulu's success seemed promising, with fans believing in its business model [source: Perez]. However, critics have remained skeptical, questioning whether the numbers truly reflect the financial reality behind Hulu's operations [source: Blodget].

In this article, we will explore the viewing and social networking features available on Hulu.com. Additionally, we’ll examine the computing infrastructure supporting Hulu's service, as well as the site's business model and its societal impact.

The Hulu Web Site

Hulu.com offers browser-based video streaming powered by Adobe Flash. While watching, both the video and viewer controls are integrated into the interactive Flash interface. Supported browsers include Internet Explorer 6.0+, Firefox 1.5+, and Safari 2.0+. Additionally, the installed Flash player must be version 9.0.115 or higher, with version 9.0.124.0 or above required for high-definition streams [source: Hulu].

Upon visiting Hulu.com, you'll be greeted with a slideshow of popular choices, along with various search and filtering options. You can browse videos by category through the "Channels" or "Collections" sections, or choose from featured, popular, or recently added content. To find something specific, type your query into one of the search fields. Click on a video’s name or thumbnail to play, and check out Hulu’s recommendations for similar videos.

To handle intellectual property and licensing challenges related to international video distribution, Hulu employs geo-blocking to restrict access to viewers within the United States. If you try to access Hulu from a restricted region, you’ll receive a message apologizing for the inconvenience and encouraging you to stay updated on content availability in your area. Hulu’s support page mentions their goal to "make Hulu's growing content lineup available worldwide as quickly as possible" [source: Hulu]. U.S. users experiencing an incorrect block are instructed to complete an information form for support assistance.

Hulu makes it simple for users to stay updated with the latest news. In May 2009, the company launched Hulu Labs to showcase its newest advancements. At the forefront of Hulu Labs is the beta version of Hulu Desktop, a free software that can be downloaded and installed on your computer. With Hulu Desktop, you no longer need to open your web browser to watch Hulu videos. Built on the Adobe AIR* framework, which is also free and compatible with most computers, Hulu Desktop streamlines your viewing experience.

Next, we’ll dive into the user experience at Hulu.com, covering subscriptions, queues, and features designed for feedback and sharing.

Hulu's Subscriber Experience

You can watch videos and read reviews and discussions from other users without creating a Hulu.com account. To participate in discussions, post your own feedback, or use other interactive features, simply click the "Sign Up" button to create an account.

Once you're signed in, you can post your own reviews and start discussion threads, as well as rate videos using a five-star system. The most valuable features, however, are subscriptions and your queue. To follow a TV series, simply subscribe to it through the Popular Shows section or the main page of the series. New episodes are added to your queue as soon as they’re released on Hulu. You can also add individual videos to your queue by clicking the "+" icon next to their listing while browsing.

The queue link at the top of the page shows the current number of items in your queue. Click this link to access your queue and subscriptions in your Hulu profile. From there, you can adjust the play order, remove videos, and manage your subscriptions. When you play a video from your queue, Hulu will automatically queue the next video in the list.

If you have friends who also use Hulu, you can take advantage of Hulu's social networking features. Use the Friends tab in your profile to find and manage friends, and see what they’re watching. You can also link your Hulu account to social networks like Facebook and MySpace. If you want to keep certain queued videos private from friends, visit your queue and subscriptions tab, select the videos, and choose "Make Selected Private" from the "More Actions" menu.

Even if you don't visit Hulu.com daily, you can keep track of your queue by subscribing to regular email notifications whenever new videos are added to your subscriptions. Additionally, you can stay updated on new content and service announcements by following the Hulu Blog or subscribing to the Hulu RSS feed. Links at the bottom of the page lead to the blog, RSS feed, and widgets for third-party tools like iGoogle and the HD Gallery, which we’ll cover later.

On the next page, we will take a closer look at Hulu's video viewing options.

How to View Videos on Hulu

Hulu.com uses Adobe's platform for video playback. As mentioned earlier, the player is an interactive Flash presentation. Hulu's distribution partners also stream the same video content, displaying the Hulu logo watermark in the lower-right corner of the screen. However, these partner sites use their own Flash players to show the content.

While watching a video, hover your mouse over the Flash player to access all interactive features. In addition to play, pause, and volume controls, you can also track the video’s progress and click on the timeline to skip to different sections. To enable closed captioning, click the "cc" button located between the playtime and volume controls.

Hulu provides various viewing options on either side of the video. On the left side, you can click to view video details, share the video via email, blog post, or by recommending it to a Hulu friend. You also have the option to embed the video on another website, with a timeline feature allowing you to control the portion of the video you wish to embed.

On the right side of the video, Hulu offers three viewing modes. The full screen option enlarges the video to fill your computer screen, returning to the normal browser mode when you press the escape key or open other applications. The "pop out" mode launches the video in a separate resizable browser window, allowing you to multitask. The "lower lights" mode dims and disables the rest of the webpage, focusing the screen on the video and sponsor’s banner, which you can turn off by toggling the "raise lights" option.

The following page discusses the technology powering the Hulu website and its video streaming services.

Hulu Technology

Hulu.com utilizes Cascading Style Sheets (CSS) and JavaScript for designing its webpages. The video and control functionalities are powered through the Flash player on your computer's browser. Upon requesting a video, Hulu streams it in Flash format (FLV), delivering the video file along with the player and advertisements from sponsors.

Hulu encodes the video using one of two video encoding technologies, known as codecs, that convert the streaming data into visual images on your screen and sound through your speakers. The video file is sent to you at one of five available speeds or bitrates, measured in data sent per second. The codec chosen by Hulu depends on the bitrate at which the video is transmitted.

The site employs the On2 Flash VP6 codec for video streams running at bitrates of 480 kilobits per second (Kbps) and 700 Kbps. This codec is supported by Flash versions 8.0 and above, which are found on more than 98 percent of U.S. computers. For higher bitrate streams of 1,000 Kbps and 2,500 Kbps, Hulu uses a codec that demands more from your Internet connection. This codec follows the H.264 video coding standard, which requires Flash version 9.0.124.0 or higher [source: Hulu].

How does all this work together? While watching most videos on Hulu, you have control over the bitrate as you switch between two progressive scan rates: 360p (standard resolution) or 480p (high resolution). Hulu provides the following bitrates for each progressive scan rate, along with the recommended bandwidths to ensure the best video viewing experience:

Standard Progressive Scan Rate: 360p

Bitrate: 480 Kbps or 700 Kbps

Suggested Bandwidth: 1,000 Kbps (approximately 1 Mbps)

High-Definition Progressive Scan Rate: 480p

Bitrate: 1,000 Kbps

Recommended Bandwidth: 1,500 Kbps (approximately 1.5 Mbps)

To address unexpected pauses caused by slower or congested Internet connections, you can buffer the video. Buffering allows your computer to download and save more of the stream's data before the video plays. To do this, press the pause button and wait for Hulu's buffer indicator to show more solid bars.

Hulu's 2,500 Kbps stream delivers videos from its HD gallery [source: Hulu]. As of June 2009, the gallery can be accessed at http://www.hulu.com/hd. Be sure not to confuse the high-definition videos in the HD Gallery with other high-resolution or widescreen videos available on Hulu.

Videos in the HD Gallery boast a resolution of 1280 x 720 (with a 16:9 widescreen aspect ratio) and stream at a progressive scan rate of 720p [source: Hulu]. These specifications align with the Advanced Television Systems Committee (ATSC) standards for high-definition digital television (HDTV). The following chart compares the quality of Hulu's HD gallery to that of other video technologies:

Hulu HD Gallery

DVD

Blu-ray

Hulu creates most of the content you see in your browser directly, but they also partner with other companies to deliver the videos. As mentioned earlier, Adobe is responsible for providing Hulu's video player platform. Additionally, Hulu works with the technology powerhouse Akamai, which manages the content delivery network (CDN) for Hulu [source: Hulu]. Akamai currently handles the web content delivery for many major companies and accounts for about 20 percent of all internet traffic today [source: Akamai]. To improve the efficiency of this process, Akamai uses proprietary software to monitor the internet, identify the best routes, and replicate content.

Next, we'll take a look at Hulu's sponsors, revenue sources, and overall business model.

The Business Side of Hulu

Hulu, headquartered in Los Angeles, has around 125 employees in offices across Los Angeles, New York, Beijing, and Chicago. The company’s board of directors includes executives from NBC Universal, Fox, Providence Equity Partners, and Hulu itself. Keeping the public informed is a top priority for Hulu, with CEO Jason Kilar and others frequently posting updates on the Hulu blog regarding new site features and business partnerships.

Like traditional television, Hulu relies on revenue from its sponsors to offer free video content. However, this comes at a cost: Hulu displays advertisements from its sponsors whenever you access a video. These ads consist of short video spots that appear before and after the video, as well as during natural commercial breaks. In addition, sponsor banners and video overlays are displayed alongside the content and link to the sponsor’s website. Hulu provides sponsors with a comprehensive list of these ad formats in its media kit.

Hulu shares the revenue from ads with both its content providers and distribution partners. While the company does not reveal the exact breakdown of revenue distribution, some sources suggest that around 70% of the ad revenue is directed to the content provider, and approximately 10% is allocated to the distribution partner if the video appears on their website [source: Blodget]. Despite some criticism over keeping only 20% of its revenue, Hulu has continued to form new partnerships with content providers (most recently with Disney in April 2009) and sees consistent growth in sponsors and viewers [source: Hulu].

A notable absence from Hulu's partner list is YouTube, the internet sensation. In the early days of Hulu, executives from News Corporation and NBC Universal reached out to YouTube in search of fresh, user-generated content. However, in 2007, Hulu shifted its business model to differentiate itself from YouTube. Rather than featuring a mix of user-uploaded videos and viral clips, Hulu chose to focus solely on 'fresh, premium broadcast TV content' from professional sources [source: Kuchinskas].

Continue to the next section for an exploration of the challenges Hulu faces and the strategies the company is using to address them.

Hulu's Big Challenges

To maintain its business model, Hulu takes various steps to support its content providers. This includes tackling piracy and viral redistribution, particularly when users embed Hulu content in a way that violates the terms of service. Back in early 2008, while Hulu was still in private beta, spokesperson Christina Lee mentioned, 'We encourage the viral distribution of Hulu content in accordance with our terms of use' [source: Albanesius]. As the number of providers grew, Hulu found it necessary to regulate embedding practices on third-party websites and applications.

One notable incident involving Hulu restricting embedding occurred with Boxee, a media browser that aggregates both local and online content in a single interface. Though still in alpha when Hulu intervened, Boxee already had over 400,000 users. It allowed Boxee users to watch Hulu content, complete with ads, just as they would on Hulu's website. In response to requests from its content providers, Hulu updated its terms of use in March 2009 to prevent Boxee from offering Hulu content [source: Slattery]. CEO Jason Kilar expressed regret over the situation, but emphasized the importance of respecting content providers' wishes [source: Kilar].

To prevent third-party applications from abusing its content, Hulu has encrypted its HTML content. Some argue that these efforts to restrict access may unintentionally promote piracy instead. Brennon Slattery from PC World observes, 'The savvy public knows what it wants and where to find it, no matter how many blockades stand in the way' [source: Slattery].

Hulu also faces piracy challenges from the use of video capture software and methods to bypass geo-blocking. Aware of these hurdles, Hulu acknowledges that its main competition comes from 'the various piracy services that enable users with the ability to illegally access premium content for free, without the permission of the content owner' [source: Hulu].

Hulu and the Shift Toward Online TV

Despite facing challenges and some controversy, Hulu has been at the forefront of the major shift from traditional cable and broadcast TV to online television. A 2007 Deloitte study revealed that nearly half of viewers aged 18 to 49 regularly visit TV websites, often following recommendations from peers. While audiences across all age groups acknowledge the value of the Internet, it’s clear that the younger generation is driving the transition to online TV [source: Deloitte]. MarketingShift.com's Matt O'Hern called this trend the 'Hulu Effect,' highlighting Hulu’s influence in the growing online TV landscape [source: O'Hern].

In today’s tough economic climate, many early adopters have turned to Hulu and other online TV platforms, even going so far as to cancel their cable subscriptions and ditch their digital video recorders (DVR) [source: CancelCable.com]. Streaming services like Netflix now offer the option to watch films online rather than waiting for a DVD, and most mobile carriers now provide streaming services for on-the-go viewing. Rumors are circulating that Hulu is working on an app for Apple's iPhone that will be compatible with both 3G and Wi-Fi, enhancing the Hulu experience for iPhone users [source: Frommer]. As these alternatives gain traction, cable TV providers will need to adapt to the growing online audience to stay competitive.

Where does Hulu go from here? If the online viewing trend continues at its current pace, Hulu is likely to experience consistent growth without altering its current business model. However, should ISPs impose bandwidth caps, this expansion might be restricted, potentially forcing Hulu to explore other revenue models such as paid content or subscriptions. For the time being, Hulu is well-positioned to maintain its leadership in delivering top-quality online video content.