Hulu touts about TV anytime, anywhere. But hooking your TV to the Net? Crazy talk!

Funny pages: Hulu offers web video, but doesn't encourage Net TV. Image: Hulu

I had an epiphany early last year when I visited Hulu for an article David Kirkpatrick and I were writing about the unexpectedly successful young venture.

Watching TV shows on Hulu was such a pleasant experience with Hulu that the company should encourage users to connect their PCs to televisions. Technologically it's not a difficult thing to do, but it's not terribly convenient. A PC needs to be near the TV, the remote-control experience isn't good, and so on. I remember Hulu executives smiling kindly at my suggestion but not offering much in the way of feedback.

With hindsight, I see how naive I was.

Hulu's owners are Fox Televion (a unit of News Corp. (NWS)), NBC Universal (controlled by General Electric (GE)), and, more recently, Disney (DIS), which owns ABC. The last thing these media conglomerates want is for their Webby startup to go around encouraging people to watch Internet videos on their TVs.

Technology is not the problem

Internet ads are small potatoes compared with TV spots. Online advertising may be growing, but it doesn't replace the big bucks from broadcast, cable and satellite TV. Hulu talked a good game about doing what was right for consumers, and it did build nice video viewing software on the Web. But when it comes to encourage folks to  use Hulu on their TVs? No way.

So as we head into 2010 the long-assumed dream of an "Internet bypass" or "over-the-top video" remains just that, a dream.

Consider:

* Boxee, a startup whose software makes it easy to connect TVs and PCs has been playing a cat-and-mouse game with Hulu for the very reasons described above.

* Apple (AAPL) has had next to no success with Apple TV, a niche product that enables TV viewing of videos in an iTunes playlist — and nothing else.

* Sony (SNE) recently introduced an Internet-enabled TV with the promise of customers being able to  purchase a Sony movie. Yet the movie comes with an exorbitant price tag so as to avoid upsetting Wal-Mart, the nation's largest seller of DVDs and therefore an important Sony vendor.

These are all baby steps for something that, technologically at least, seems inevitable. As Richard Greenfield of Pali Capital  told The New York Times: “The time when a majority of consumers have Internet-enabled TVs is a long way off. “But it’s moving the ball in the right direction.”

Why does it have to be so hard? That's easy. Incumbent video providers will hold on to their diminishing profit margins as long as possibly can even while saying they are embracing new technology, like Hulu. Introduced eight Bravia models that are Internet-enabled won't solve the problem.

What will?

Source: Apple Inc.

Apple (AAPL), a company that counts Al Gore among its board members and whose CEO once dated Joan Baez, found itself the unlikely target of an advertising boycott campaign this week.

The issue is an iPhone ad that appeared on the Aug. 7 broadcast of the Glenn Beck show on the Fox News Channel (NWS).

Under pressure from advocacy groups, more than a dozen companies, including ConAgra (CAG), Geico, Procter & Gamble (PG) and Progressive (PRG), have pulled their commercials from the conservative commentators' show. (See here.)

The boycott was launched last month by ColorofChange.org after Beck made remarks on Fox and Friends that labeled President Obama a "racist" with a “deep-seated hatred for white people or the white culture.”

The campaign was picked up by democrats.com, which provided its members with a list of advertisers and an e-mail form letter that threatens to stop buying the sponsors' products as long as they advertise on Fox News. The organization set a goal of 100,000 letters; as of Saturday morning 46,575 had been sent.

It's not clear how the iPhone ad ended up on the Glenn Beck show. The political blog Daily Kos, which has been monitoring the effects of the boycott, points out that many of the sponsors sticking with the show are "no name companies" like Avodart and Metastock that buy up cheap spots on late night rebroadcasts. Apple is one of the exceptions.

"Apple never used to have any ads on the Glenn Beck show," writes Daily Kos' wikoogle. "Their ads mostly showed up mid afternoon or very latenight on Fox News, and sometimes on the O'Reilly Factor, but never during either Glenn Beck or Sean Hannity. In all likelihood, Apple's ads purchased for very late night airings were moved free of charge to more lucrative spots, without Apple's knowledge." (link)

Although the boycott began after Beck's July 7 remarks about Obama's alleged racism, it was broadened by democrats.com into an attack on Fox News and what it calls the cable network's campaign of "outright hate-mongering and incitement of violence" following Obama's election.

As part of its petition drive, it lists these examples:

• 6/30/09 Glenn Beck agreed with guest who urged bin Laden to attack U.S. with nuclear weapons: "The only chance we have as a country right now is for Osama bin Laden to deploy and detonate a major weapon in the United States. Because it’s going to take a grassroots, bottom-up pressure, because these politicians prize their office, prize the praise of the media and the Europeans. Only — it’s an absurd situation. Again, only Osama can execute an attack which will force Americans to demand that their government protect them effectively, consistently, and with as much violence as necessary."
• 7/25/09 Neil Cavuto and guest said health care reform will impose universal euthanasia like "Soylent Green."
• 7/28/09 Glenn Beck called President Obama a racist: "The President has exposed himself as a guy … over and over and over again … who has a deep-seated hatred for white people … or the white culture… This man is a racist."
• 8/6/09 Glenn Beck "joked" about giving Speaker Pelosi a glass of wine with poison.

Apple has not yet responded to a request for comment.

Alec Baldwin promotes Hulu in traditional TV spots.

The Web video shakeout has begun. Hulu, a venture of NBC, ABC, and Fox, is growing nicely, aided in part by a slick marketing campaign using, of all things, television ads starring Alec Baldwin. But a slew of smaller sites are starting to reformulate their strategies in the hope of surviving.

Joost, which was started by the founders of Skype Technologies, recently announced it would reinvent itself as a wholesale technology provider for media companies to publish video. The New York City–based outfit was launched amid great expectations in 2006 with $45 million in funding.

Video-sharing site Veoh may also be in trouble. High-profile backers, including ex-Disney (DIS) CEO Michael Eisner and Goldman Sachs (GS), have sunk $99 million into the New York–based site since its 2005 launch. In addition to the usual startups costs, Veoh has been hobbled by an expensive court battle with Vivendi's Universal Music Group over alleged copyright violations.

Back to main story: Google (still) loves YouTube

The Macworld Conference & Expo, Silicon Valley's largest technology trade show, opens Monday. But the moment everyone is waiting for comes Tuesday morning, when Steve Jobs makes his annual keynote address at San Francisco's Moscone Center.

Jobs has set a high bar for himself. At Macworld 2006, he introduced the first Intel (INTC)-based Macs — sparking a burst of sales that nearly doubled Apple's (AAPL) market share from roughly 4% to something approaching 8% (link). At Macworld 2007 he unveiled not just the all-but-forgotten Apple TV, but also the iPhone — a device that in nearly everybody's book turned out to be the machine of the year.

What can Jobs do to top that?

There's no shortage of speculation. The Apple rumor machinery has grown so elaborate that for the second year in a row, Ars Technica's John Siracusa has published a keynote Bingo card (available in PDF format here and in iPhone format here), with boxes to be filled in as Jobs makes his announcements, introduces his guests and trots out his trademark rhetorical flourishes. (The rules of the game are spelled out here.)

Nobody has yet shouted out "Bingo!" in middle of a Steve Jobs presentation — a moment brilliantly anticipated in IBM's buzzword Bingo TV ad (link) — but this could be the year.

Some of Siracusa's boxes are obviously more important than others. A couple (Mac Pro and Xserve) were preemptively filled last week, and there are a few key possibilities that he missed. Watch especially for:

• A Skinny MacBook. Probably the leading candidate for Jobs' one-more-thing moment, it's already been named — Macbook air, thin, nano and mini — and imagined in PhotoShop (see here, for example) by bloggers who should know better. Likely specs: 12 to 13-inch. LED backlit screen, under 3 lbs., half as thick as today's MacBooks, 32, 64 or even 128GB solid-state flash drive, priced around $1,600.
• iPhone updates. A bump in capacity from 8GB to 16GB and maybe 32GB is expected, as well as a preview of the software developers toolkit (SDK) promised for February; we might even get a few demos from developers, like EA, who were seeded with the SDK last fall. A 3G iPhone and a Newton-type tablet are reported to be in the works, but not yet ready for prime time.
• Movie rentals. This is the item Hollywood is following most closely. It's been widely reported that Fox and Disney are likely to make movies available on iTunes for overnight rental (at $3 to $5 for 24 hours) or for purchase for roughly the price of a shrink-wrapped DVD. If, as rumored, Paramount, Lions Gate and Warner Bros join them, the flood of fresh video content could breath new life into the Apple TV. (The Associated Press reported Sunday that Netflix (NFLX), anticipating such a move by Apple, will offer unlimited monthly video streaming.)
• DRM-free Music. Having famously championed the cause with his February 2007 Thoughts on Music memo, it would be surprising — and disappointing — if Jobs did not use this opportunity to announce a significant expansion of the DRM-free offerings in the iTunes Store, especially after the last of the major labels announced last week that they were putting their music on Amazon.com (AMZN) without copy protection.
• Microsoft (MSFT) Office 2008. No surprises here, since the reviews are already in, but an excuse for what should be the most lavish after-hours party of the show.
• The Beatles. It's about time. Just in case, Yoko Ono's John Lennon Educational Tour Bus mobile recording studio is making the trip from its Las Vegas unveiling at the Consumer Electronics Show to be at Macworld. A few hours after Jobs' speech, there's a press reception in the bus that's co-sponsored by Apple.

You already see the flashbulbs popping, right? But is it enough? Apple's marketing machinery is like a shark that must keep swimming or die. Even if nearly every square on the Bingo card were to be filled on Tuesday, would Jobs have delivered the kind of innovation and buzz the faithful have come to expect?

And then there's Wall Street to consider. Apple was the high-flying tech stock of year, its share prices having more than doubled in 2007. But as a CNNMoney headline put it on Friday, "What've you done for me lately?" The stock fell nearly 30 points over the last two weeks, which could be taken as a measure of traders' uncertaintly. (Or it could just be a well-timed pause to set up the Macworld effect, the short-term bump tech share prices often enjoy after a Steve Jobs' keynote.)

No matter how high the bar, Jupiter Research analyst Michael Gartenberg is confident that Jobs will clear it. "This is a company that thinks in terms of strategy," he says. "Do I think they'll deliver something as disruptive as the iPhone? No. You don't achieve that kind of disruption every week; it would be tantamount to getting into a whole new industry. But somehow Jobs always manages to meet expectations, even if the expectations are different."

To find out how different, tune in Tuesday for Fortune senior writer Jon Fortt live blogging from the keynote at fortune.com/bigtech, video coverage from CNNMoney.com and our post-keynote analysis here on Tuesday afternoon.

There are few things Steve Jobs loves more than a dramatic Macworld surprise announcement, but three weeks before his annual keynote speech, someone – my guess would be Rupert Murdoch – just stole his thunder.

Several sources this morning – including the Financial Times and the Wall Street Journal – are reporting that Apple (AAPL) and News Corp. (NWS) have struck a deal for a new video-on-demand service that could change the way digital movies are distributed, viewed and paid for.

Citing an unnamed "person familiar with the situation," the FT reports that the two companies signed an agreement that would allow customers to download the latest 20th Century Fox movies through the iTunes store and watch them for a limited time. No pricing details were available, but earlier reports suggested that Fox and Apple were talking about charging $2.99 for 30 days viewing. That's considerably cheaper than competing services from BlockBuster and NetFlix, neither of which work with iTunes, Macs or iPods.

In addition, Apple is reportedly extending its FairPlay digital rights management system for the first time to another company's product. As part of the same deal, Fox will sell its new releases on FairPlay DVDs that permit customers to transfer, or "rip" the content to a computer or video iPod. As the FT points out, there is software available to rip movies today, but using it is considered piracy and can land you in jail.

Disney is the only other studio that makes new releases available on iTunes, but only to buy, not to rent. Paramount, Metro-Goldwyn-Mayer and Lionsgate sell older library titles. But the tide may be turning, and Apple is reported to be in talks with Sony, Paramount and Warner Brothers.

"Fox and potentially other ­studios are coming around to the idea that there is nobody out there to challenge iTunes," Jonathan Weitz, a principal with IBB Consulting, told the FT. "This deal is a sign that media mobility is coming to the mainstream."

The best instant analysis of the deal this morning is on Silicon Alley Insider, where Dan Frommer seems to have stayed up all night trying to work the angles. See his winners and losers column here and his six questions here. Among the latter, our favorite is No. 6:

How will Blockbuster, Amazon, Netflix, Microsoft, Sony, cable, telco, and cellphone companies, and other rivals respond? Apple's iPod line dominates the portable media player market, and the iPhone is taking a big chunk of the smartphone market. And now, it appears, there will finally be digital rentals compatible with Apple's gadgets. Surely Jobs' rivals haven't been sitting around doing nothing. How will they fight back? Lower rental prices? More portability/less DRM? This should be a fun one!

Two developments in the wake of NBC Universal's (GE) weekend exit from Apple's (AAPL) iTunes store:

Ruport Murdoch's Twentieth Century Fox (NWS) is reported to be "actively negotiating" with Apple to put new releases and catalog titles on iTunes beginning in early 2008. According to Rich Greenfield at Pali Research (link; activation required) several things have changed to break the deadlock, including growing levels of movie piracy and new flexibility on Apple's part in terms of pricing. Greenfield's casual speculation that Apple might be willing to charge $15 per movie download has triggered some interesting analysis (see AppleInsider and Ars Technica's Infinite Loop) but should probably not be treated as gospel.

NBC Universal CEO Jeff Zucker placed his company's digital strategy last on his list of priorities in a luncheon speech at the UBS Global Media & Communications Conference on Monday. Repeating an earlier claim that NBCU's deal with Apple was worth "only $15 million" in profit, he added: "That’s nothing to sneeze at, every dollar matters. But it wasn’t the game changer for us that it was for Apple." He pointed to NBC's video offerings on Amazon and NBC Direct and singled out for praise hulu.com, its joint effort with News Corp.:

We're in the beta test with Hulu and we have 60,000 users, seven major advertisers. The online press wanted to kill it, but it's doing well. Advertisers tell us they want a safe environment. That's what this is about. They don't want a cat on a skateboard, but they do want The Simpsons or a film they like. (see Paid Content's report here)