How Hulu Works

Hulu.com features browser-based viewing powered by Adobe Flash technology. While you're watching a video there, both the video and all your viewer controls are built into the same interactive Flash presentation. Compatible Web browsers include Internet Explorer 6.0 and higher, Firefox 1.5 and higher, and Safari 2.0 and higher. In addition, the locally installed Flash player must be version 9.0.115 or higher, with version 9.0.124.0 or higher required for Hulu's higher resolution streams [source: Hulu].

When you first open Hulu.com, you're shown a slideshow of popular choices, surrounded by various search and filter options. View the "Channels" or "Collections" lists to browse videos by category, or click the links scattered throughout the page to select from popular, featured, or recently added items. To search for something specific, enter that information in one of the search text boxes. Click the linked name or thumbnail of a video to play it, and follow Hulu's suggestions at the end to watch other videos you might enjoy.

To address the intellectual property and licensing issues that come with providing video content internationally, Hulu uses geo-blocking to limit site access to viewers within the United States. If you access Hulu content from a blocked geographic region, then instead of a Flash video, you'll receive a friendly message of apology encouraging you to stay informed about the availability of content in your area. Hulu's support site states that their intention is to "make Hulu's growing content lineup available worldwide as quickly as possible" [source: Hulu]. If you are in the U.S. and mistakenly encounter a block, Hulu asks you to complete an information form for Hulu support.

Hulu makes it easy for users to keep up with its most recent news. The company launched Hulu Labs in late May 2009 to highlight Hulu's latest developments. Headlining Hulu Labs is the beta release of the Hulu Desktop, which is free software that you can download and install on your computer. Hulu Desktop eliminates the need to open your Web browser to watch Hulu videos. The Hulu Desktop is built on the Adobe AIR* framework, which is also free and can run on most computers.

Next, we'll explore the user experience at Hulu.com, including subscriptions, queues and features for feedback and sharing.

Without creating a Hulu.com user account, you can view videos and use the tabs below the video player to read reviews and discussions posted by other Hulu users. To post your own feedback, and to use other interactive features, simply click the "Sign Up" button and create an account.

Once you've signed in, you can contribute your own reviews and discussion threads, and you can rate videos using a five-star rating tool. The most useful account features, however, are the subscriptions and queue. When you want to follow a TV series, you can subscribe to that series using links in the Popular Shows listing or the main page for the series. Then, when a new episode of the series premieres on Hulu, it's added to your queue. You can also add any single video to your queue using the linked "+" sign next to its listing while you are browsing.

Your queue link at the top of the page indicates the number of items in it at any particular time, and you can click this link to jump to the queue and subscriptions included in your Hulu user profile. From there, you can change the play order, remove videos and manage your subscriptions. If you play a video from your queue, Hulu automatically follows it with the next video listed there.

If you have other friends that use Hulu.com, you can use Hulu's other social networking features. Use the Friends tab when editing your profile to find friends, manage your list of friends, and see what your friends are watching. You can even connect your Hulu account to social networks like Facebook and MySpace. Likewise, if you're connected to friends and you want to keep them from seeing some of your queued videos, go back to your queue and subscriptions tab to select videos and choose "Make Selected Private" from the "More Actions" list.

Even if you don't check Hulu.com every day, you can monitor your queue by signing up to receive regular emails when a subscription adds new videos. Beyond the queue, you can also monitor new additions to Hulu's content and its latest service announcements by following the Hulu Blog or by adding the Hulu RSS feed. The links at the bottom of the page include the blog, RSS feed and widgets for third-party tools such as iGoogle and the HD Gallery that we'll describe in a later section.

On the next page, we'll explore Hulu's video viewing options.

Adobe provides the video player platform at Hulu.com. As we mentioned in the previous section, the player is an interactive Flash presentation. Hulu's distribution partners stream the same video content from Hulu, including the Hulu logo watermark in the lower right corner of the screen. However, partner sites use their own Flash players to display the content.

While a video is playing, move your mouse over the Flash presentation to use all the interactive options. Not only can you play, pause, and adjust the volume, but you can also monitor the video's playing time and click any spot on the timeline to jump to different parts of the video. To turn on closed captioning, click the "cc" between the playtime and volume controls.

Advertisements are loaded dynamically as soon as the video is loaded. Sponsors often include a banner ad above the Flash presentation in addition to the "limited interruption" message at the beginning of the video. Marks in the video timeline indicate upcoming ads, but occasionally Hulu offers users the choice to watch one longer ad at the start of the video instead of the shorter ads located throughout. You can't skip ads while they're playing, but Hulu lets you give featured ads a thumbs-up or -down. Note that your options for viewing or skipping ads vary at the sites belonging to Hulu's distribution partners.

On either side of the video, Hulu presents several viewing options. On the left side, you can click to view video details or to share the video by e-mail, blog post or Hulu friend recommendation. Also on the left side is the option to embed the video on another Web site, including a timeline that lets you adjust how much of the video you want to embed.

On the right side of the video, Hulu offers three different viewing options. The full screen option fills your computer screen, though Hulu returns to its normal browser mode when you press your escape key or try to use any other applications on the computer. The "pop out" option launches the Flash application in a separate resizable browser window that allows you to use your browser for other things as you watch. The "lower lights" feature darkens and disables the rest of the Web page to highlight the video and the sponsor's banner. You can toggle to "raise lights" to turn this off.

The next page covers the technology behind the Hulu Web site and video streams.

Hulu.com uses Cascading Style Sheets (CSS) and JavaScript to lay out its web pages, and it powers the video and controls through the Flash player and browser on your computer. When you request a video, Hulu sends it to you it as a Flash format streaming video file (FLV) along with the video player and the sponsors' advertisements.

Hulu encodes the video file for one of two types of video encoding devices (known as codecs) that translates streaming data into the moving images on your screen and the sound in your speakers. Hulu sends the file to you at one of five speeds, or bitrates, measured as the amount of data sent per second. When you play a video, the codec Hulu uses depends on the bitrate at which it's sending the video to you.

The site uses the On2 Flash VP6 codec for video streams that run at bitrates of 480 kilobits per second (Kbps) and 700 Kbps. This codec is supported by Flash versions 8.0 and higher, which is installed in more than 98 percent of computers in the U.S. Hulu's higher bitrate streams of 1,000 Kbps and 2,500 Kbps use a codec that requires a bit more from your Internet connection. This more intensive codec follows the H.264 video coding standard, which requires Flash 9.0.124.0 or higher [source: Hulu].

How does all of this come together? While you're viewing most videos on Hulu, you control the bitrate when you switch between two progressive scan rates: 360p (standard resolution) or 480p (high resolution). Hulu posts the following bitrates for each progressive scan rate along with recommended bandwidths for the best video viewing experience:

Progressive Scan Rate: 360p

Bitrate: 480 Kbps or 700 Kbps

Recommended Bandwidth: 1,000 Kbps (about 1 Mbps)

Progressive Scan Rate: 480p

Bitrate: 1,000 Kbps

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

You can buffer the video to help resolve the sudden pauses created by slower or congested Internet connections. Buffering allows your computer to download and store more of the data stream before the video plays. To buffer the video, hit the pause button and wait for Hulu's buffer indicator to show more solid bars.

Hulu's 2,500 Kbps stream runs the videos available in its HD gallery [source: Hulu]. As of June 2009, you can find the gallery at http://www.hulu.com/hd. When browsing videos, do not confuse the high-definition videos in the HD Gallery with Hulu's other high-resolution and widescreen videos.

Videos in the HD Gallery have a higher resolution of 1280 x 720 (with the 16:9 widescreen aspect ratio), and they run at a progressive scan rate of 720p [source: Hulu]. These video quality measurements are consistent with the Advanced Television Systems Committee (ATSC) standards for defining 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 what you see in your Web browser themselves, but they work with other companies behind the scenes to deliver the video to you. As we previously mentioned, Adobe provides Hulu's video player platform. Hulu also collaborates with tech giant Akamai, who manages its content delivery network (CDN) [source: Hulu]. Akamai currently manages Web content delivery for many big-name corporations, and it accounts for the delivery of about 20 percent of today's total Internet traffic [source: Akamai]. To optimize this delivery, Akamai maintains its own proprietary software platform that monitors the Internet, finds the best routes and replicates content.

Next, we'll cover Hulu's sponsors, revenue and business model.

Headquartered in Los Angeles, Hulu employs approximately 125 people in L.A., New York, Beijing and Chicago. Hulu's board of directors includes executives from NBC Universal, Fox, Providence Equity Partners and Hulu itself. Communication with the public is of utmost importance to the company: Virtually since day one, CEO Jason Kilar and others have posted regularly to the Hulu blog to keep people informed of new site features and business deals.

Like the broadcast television business, Hulu depends on revenue from its sponsors so it can provide video free of charge. Of course, everything comes with a price: Hulu loads advertisements from its sponsors every time you request a video. These ads include short video spots that run before and after the video, and during the video's natural commercial breaks. Each sponsor also contributes ad banners and video overlays, which are displayed with the video and linked to the sponsor's site. Hulu offers its sponsors a complete list of these and other ad formats in its media kit.

Hulu splits its ad revenue with the site's content providers and distribution partners. While the company doesn't disclose its current revenue distribution percentages, some reports have stated that Hulu gives about 70 percent of its ad revenue to the content provider and about 10 percent to the distribution partner if the video was shown on the partner Web site [source: Blodget]. Critics of Hulu's business model have scrutinized the company's choice to keep as little as 20 percent of its revenue, but Hulu continues to partner with more content providers (most recently, Disney in April 2009) and enjoy a steady increase in sponsors and viewers [source: Hulu].

Noticeably absent among Hulu's partners is the Internet sensation YouTube. Early in Hulu's development, executives from News Corporation and NBC Universal approached YouTube in search of fresh user-generated content for Hulu. However, throughout 2007, Hulu's business model changed shape to differentiate itself from YouTube. Instead, Hulu would show only "fresh, premium broadcast TV content" from professional providers, free from the mix of user-uploaded home videos and creatively copyright-bending clips that made YouTube a hit [source: Kuchinskas].

Continue to the next section to read about the challenges Hulu faces -- and how the company is meeting those challenges.

To sustain its business model, Hulu does everything it can to accommodate its content providers. This includes fighting piracy and viral redistribution (using Hulu's embedding feature) that conflicts with contractual agreements with those providers. In early 2008, while Hulu was still in private beta, Hulu spokeswoman Christina Lee stated, "We encourage the viral distribution of Hulu content in accordance with our terms of use" [source: Albanesius]. As the list of providers grew, so did Hulu's need to tighten the reins on those embedding Hulu's content in their Web sites and third-party applications.

One highly publicized case of Hulu limiting embedding concerned the media browser Boxee. Boxee accesses both local and online content in a single user-friendly interface. Boxee is free open-source software, and though it was only in alpha release when Hulu stepped in, it already had more than 400,000 users. Boxee was providing Hulu content as a viewing choice for its users. Boxee users could access their Hulu Queue or browse videos to watch, with ads included, just as if they were using Hulu.com. In response to requests from its content providers, Hulu changed its terms of use in March 2009 to prohibit Boxee from using Hulu content [source: Slattery]. Kilar said he regretted the situation, but had to respect the wishes of the site's content providers [source: Kilar].

As for third-party software abuse, Hulu has encrypted its HTML content to prevent access from non-browser applications. Some reports suspect that Hulu's move to restrict content access further will have the opposite effect than what content providers suspect -- of actually increasing piracy instead of preventing it. Brennon Slattery of PC World suggests, "The savvy public knows what it wants and where to find it, no matter how many blockades stand in the way" [source: Slattery].

Other piracy challenges for Hulu include the abuse of video capturing software and geo-blocking workarounds. Hulu recognizes these challenges with the full knowledge that its main competitors are "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].

With or without its challenges and controversy, Hulu has helped lead the major shift from cable and broadcast TV to online television. Hulu's target audience is aged 18 to 49, and a 2007 Deloitte study indicated that nearly half the younger viewers in that range visit television Web sites regularly -- usually with a referral from a peer. Even though a significant portion of every age group studied embraced the value of the Internet, it's apparent that the shift toward Internet TV is a generational one -- and that the youth are leading the way [source: Deloitte]. At MarketingShift.com, Matt O'Hern dubbed this the "Hulu Effect," noting the influence Hulu has in this growing online television market [source: O'Hern].

In this strained economy, many early adopters have embraced Hulu and other online television and video sources enough to cancel cable television and turn in the digital video recorder (DVR) [source: CancelCable.com]. Movie rental services like Netflix now offer online viewing in place of a DVD for some of its feature films, and most mobile phone services offer some form of streaming video service that you can use on the go. Rumors have also spread across the Internet that Hulu itself is developing an application for Apple's iPhone that will work on both 3G and Wi-Fi networks, and will improve the Hulu viewing experience for iPhone users [source: Frommer]. With these alternatives on the horizon, cable TV providers will have to start accommodating online viewers in order to remain competitive.

So, where does Hulu go from here? If the shift to online viewing continues unabated, Hulu could enjoy steady growth in the coming years without having to change its current business plan. However, if ISPs proceed with bandwidth capping, this growth could be limited, forcing Hulu to consider other revenue options like paid content or a subscription model. For now, Hulu is poised to continue its role as a leader in providing quality online video content.