Boxee Update: Hulu Pulls the Plug

I guess Hulu doesn't Boxee after all. In our story last month we talked about Boxee's strategy of aggregating Internet TV content, and pointed out a couple of potential flaws:

"The second problem I see is with their business model. Boxee’s goal is to build up enough loyal eyeballs that they will be able to go back to the Hulus of the world and “extract value”—meaning some form of highway tax or revenue share for viewers they send to the content hosts. This is going to be difficult, since the Hulus of the world are already doing quite well without their help thank-you and once you move beyond “free” business models like Zinc and Sling.com, you seem to suddenly attract the attention of a lot of lawyers-- you can send your friends for free to my pumpkin patch but don't try to charge me at the gate for the tour."

Sadly, my prediction came true. I think the problem was that Boxee has to "groom" all of the great content it gets to fit its sleek, user interface. It doesn't just aggregate the content from various sources and then pass it off to be watched. It does a little too much manipulation of the content for the Hulus of the world to be comfortable. The problem is, Hulu and the others want to own as much of the total viewing experience as possible, from content search and selection, to watching, to clicking around the site (and advertising of course). Boxee ran the risk of stealing some portion of that experience, and perhaps a growing portion over time (which is what they told me themselves- see video below). Hulu could not let them extract so much value from their content and they had to be destroyed.

Watch Boxee at CES.

Now contrast this strategy with ZeeVee's Zinc. While less beautiful than the Boxee interface, Zinc is much more true to its no frills strategy of doing content aggregation, new content discovery/notification, and then passing these eyeballs off to the source of the Internet TV content for their full experience. Zinc does a little value-add with some automatic full-screen buttons, and allows you to tag your favorite content and create your own "tiles" of content sources, but it is less threatening to the Hulus of the world. Now I may be proven wrong, but I think Hulu and the others will tolerate Internet TV guide interfaces like Zinc, but crush anyone who dares to do more than send them more traffic.