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Online Streaming: Prove-You-Paid Model in Time for Olympics

The Exchange

Was the whole attraction of Hulu to many users not just that it had their favorite shows, but also that it was not burning a hole through their wallet? That party might be about to wrap up as cable companies grope for a more profitable model -- and just in time for the Olympics.

Hulu, which is owned by News Corp., Disney, Comcast and Providence, is moving toward requiring users to prove they are pay-TV customers by providing their cable or satellite TV account number to watch their favorite shows, according to a report last week.

Hulu, founded in March 2007, offers on demand streaming TV shows, movies and other digital content from more than 350 content providers, supported by ads, and a "plus" service that is also supported by a subscription fee. According to the web site:

"Hulu originated as a free, legal alternative to various piracy services that enable users to illegally access premium content for free without the permission of the content owner. In an age of many viable and alluring legal options for accessing content on demand over the Internet, Hulu seeks to be the premiere destination for premium content."

Its monetization model has battled criticism since it's founding, with Viacom pulling The Daily Show and The Colbert Report from Hulu in March 2010, for instance. They ultimately arrived at an agreement in February 2011.

The latest rumored plans come amid an industry shift as cable behemoths like Comcast streamline toward an "authentication" model. The immediate implications of the overall shift involve limited free online coverage of the summer Olympic Games from Comcast-owned NBCUniversal, will be asking for proof of subscription: "That means if you are planning to watch any of NBCUniversal's unprecedented 3,500 hours of streaming Olympic coverage or 302 medal presentations from work, make sure you bring your pay-TV bill along with your lunch," The New York Post reports.

But the complete transition could take years, and who knows what new players, models and consumer practices will pop up, potentially changing the course again.

Will you be motivated to pay for cable if your favorite shows online come with a prove-you-paid clause?  Does this fix a problem in the model?