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Last week, the online video world rejoiced. For the first time, Hulu, the online premium video provider, had more viewers than Comcast subscribers. Pro online video folks all around gathered to support the revolution as it unfolds.
The only thing missing is, well, like in most cases, money. Hulu is making small time money compared to Comcast.
The paradigm of digital cents is very simple – services are much cheaper on the internet, and the value of goods is diminished when they are distributed or sold digitally. The full phrase states that the media industry is facing a challenge – as it transforms from analog dollars to digital cents. This issue is affecting advertisers who are asking agencies to shift dollars from expensive TV spots to cheaper online advertising, which in return hurts the media business.
Hulu, though delivering the same shows as TV channels, is not making as much money as the traditional providers. This is a eye challenge to the whole media industry. But they are not alone.
The slow demise of the walled garden adds another pressure, to a different section of the value chain – the operators. The mobile market is a great example how technology is threatening the old world order. Early in this decade, when GPRS launched all over Europe, operators believed that the answer of their declining voice ARPU would come from selling content, such as ringtones and wallpapers.
The basis of this strategy was the operators controlled the availability of content to users – whatever an operator put on its portal could be sold – but nothing else. This way, by creating scarcity, the operators could gain revenues and control the subscriber’s experience.
Then came Apple.
And Google.
And Nokia.
And all these companies decided to break operator’s hegemony and tear down the garden’s walls. Android, iPhone and Ovi challenge the mobile operator’s ability to control the content and customer experience.
While media companies such as NBC and HBO don’t have a choice but to be a part of the digital cents game, operators have some ways to leverage this market disruption to their advantage.
Services are, in my opinion, a key to change the cents to dollars. Some of them are clear but still not done well, such as three screen syncing – allowing users to start watching a show on their TV set and continue to watch it on their mobile phone.
Some are based on cutting deals with the devil – and tightly integrate web services with traditional TV content. Several companies unveiled such services, such as TV and Twitter integration.
And some are down right evil, such as disregarding net neutrality and providing differentiated quality of services to content providers, based on deals with preferred content providers.
If operators will succeed in finding the right services and implement them in the near future,  we might see that they will rise to play a more significant role in  the media industry.

Last week, the online video world rejoiced. For the first time, Hulu, the online premium video provider, had more viewers than Time Warner Cable subscribers. Pro online video folks all around gathered to support the revolution as it unfolds.

The only thing missing is, well, like in most cases, money. Hulu is making small time money compared to Time Warner Cable.

The paradigm of digital cents is very simple – services are much cheaper on the internet, and the value of goods is diminished when they are distributed or sold digitally. The full phrase states that the media industry is facing a challenge – as it transforms from analog dollars to digital cents. This issue is affecting advertisers who are asking agencies to shift dollars from expensive TV spots to cheaper online advertising, which in return hurts the media business.

Hulu, though delivering the same shows as TV channels, is not making as much money as the traditional providers. This is a major challenge to the whole media industry. But it is not alone.

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