How Hulu Works

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].