If you've been following the almost comical cat-and-mouse game being played between web video site Hulu and popular new media center software Boxee, then you, like us, may have been tempted a few times to blurt out "OMG NBC WTF!" in mixed company (You'll get looks. Don't do it.). It's been off again, on again, she loves me/loves me not for a few weeks now as Boxee continues to stalk the sweet sweet content that Hulu's partners are reluctant to see appear too easily on your big screen.

At today's Digital Hollywood Media Summit in New York, NBC Universal head honcho Jeff Zucker shed some light on why exactly Hulu has been demurring: "What we’ve lost in viewers and advertising dollars on the analog side isn’t being made up for at all on the digital side. We want to find an economic model that makes sense." In other words, Show Them The Money — because on the digital side it's just not quite there. Yet in the same keynote, Zucker indicated that Hulu "is well ahead of plan and something that will be an important contributor to our company for many years to come."

 

So Hulu is more successful than expected... but not successful enough? The thinking seems to be that Hulu should be a kind of gateway drug that makes users really itch to subscribe to cable, where the Big Money is still being made, which reeks of trying to stuff a cat back into a bag. Consumers want the content and now that many of us have gotten a taste of video on demand, the market is not going to suddenly roll back to a deep and abiding desire to let cable networks try and arrange our lives around their entertainment schedules.

The other absurdity in this logic is that advertisers are getting ad impressions whether we're watching Hulu in a web browser or via a media center or streaming device. Is there no brilliant executive somewhere that can put together a plan to track those ad impressions across any platform Hulu feels like licensing to? Could it possibly be that Boxee refuses to divulge the number of streams of Hulu shows back to NBC Universal? We doubt it. Moreover, it doesn't entirely explain why Hulu hasn't pulled support from Windows-only streaming media center PlayOn — the main difference is that PlayOn is a $40 application whereas Boxee is free (PlayOn streams Netflix, Hulu, CBS, YouTube, CNN, ESPN to an Xbox 360, PS3 or HP MediaSmart TV). Is Hulu getting a cut of each PlayOn app sale, or some sort of up front licensing fee that Boxee refuses to shell out in order to access the otherwise free-to-all content from Hulu? Or is NBC Universal not as threatened by an application that streams primarily to game consoles? That would seem odd, considering they're even more likely to be connected to your big screen TV than the average computer that can run Boxee.

Nor does any of this obstructivism prevent Average Joe/Jane from concluding — probably rightly — that the best set-top box available for enjoying the brave new world of IPTV is going to be a computer with a web browser. The assumption NBC seems to be making is that those computers running Boxee aren't already connected to TVs — increasingly, they will be. And as great as it is that boxes like Roku and Vudu are cropping up to push the market along, the problem is that as soon as the next Hulu comes along those boxes are not going to support it; at least, not right away. Then there is the literal treasure trove of other content sites and video networks and sharing sites that have and will continue to crop up. I can watch YouTube on PlayON or Comedy Central on Boxee, but what if I want to watch Vimeo or Qik? I can only watch whatever content sources are selected and supported by each individual media center application or hardware device, and coding in support for each new service is non-trivial. Plus, as we've seen from the Hulu/Boxee debacle, building in the support may not even be the biggest hurdle — setting up a portfolio of agreements with each and every individual content provider will be a time and cost-prohibitive bottleneck for companies both on the software and hardware side of the IPTV equation. At the end of the day, I don't want my media center to decide for me which video gateways I should have access to. The best way to access them all is still a web browser, and will probably remain so for some time to come.

The content industry is going to have to figure out a way to get its customers what they increasingly want: video on demand from a wide variety of sources. Web consumers are conditioned to "content for free" but have shown a willingness to pay for online services. Television needs to figure out how to make itself a service on the internet. Get it together, make a super compelling subscription service that pulls in a bunch of content sources into an easy-to-use user interface, and consumers will pony up the cash to avoid the headache that is currently plaguing them in the digital living room transition. Make it extensible with an open API that smaller content creators can use to hook themselves into. Can it be that hard? It's the same freaking pipes! Who will step up to be the cable TV companies of the internet, if the cable TV companies of TV don't seem to be any closer to figuring it out?

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