Boxee reports Hulu said its content partners asked it to end their informal relationship. Boxee said it tried to plead the case for keeping Hulu on Boxee, but failed to convince the studios. Boxee removed Hulu on Friday.

"Our goal has always been to drive users to legal sources of content that are publicly available on the Internet," said Boxee CEO Avner Ronen. "We have many content partners who are generating revenue from Boxee users, and we will work with Hulu and their partners to resolve the situation as quickly as possible."

Hulu Makes a Tough Choice

In the wake of the decision by NBC and Fox to pull Hulu from Boxee, Hulu CEO Jason Kilar tried to appease Boxee users. In short, Kilar said Hulu is respecting the wishes of its content providers. Without the cooperation of its content partners, Kilar reasoned, it's not possible for Hulu to provide content via Hulu.com or its other distribution partner Web sites. However, he admitted there is no immediate win for users.

"Please know that we take very seriously our role of representing users such that we are able to provide more and more content in more and more ways over time," Kilar said. "We embrace this activity in ways that respect content owners' -- and even the entire industry's -- challenges to create great content that users love. Yes, it's a complex matter. A tough mission, and a never-ending one, but one we are passionately committed to."

Phil Leigh, senior analyst at Inside Digital Media, called the Boxee-Hulu drama "madness." As he sees it, the studios aren't going to achieve the desired result. Instead, consumers will find a way around it and may even visit illegitimate content sites to watch Internet videos.

The Laptop-TV Connection

"Consumers will soon discover laptop computers and flat-panel TVs have common connection sockets. The TV acts as a giant monitor for the laptop and the computer functions as a media controller for the TV. The laptop's onboard Wi-Fi links to a home network and thence to the Internet," Leigh said. "This provides unlimited access to Internet videos, including Hulu, on the TV screen. Given a remote mouse and keyboard, the consumer gets a comfortable lean-back viewing experience from the TV screen."

Once the laptop as media controller is set up, Leigh said, there's nothing to stop users from downloading pirated copies of TV shows and movies to watch on TV. Despite the proven abilities and smarts of NBC and Fox, Leigh argued, the studios are failing to recognize when what is new is more significant than what is familiar. The studios, be continued, should be focusing on finding ways to generate revenues from Internet videos unavailable on conventional television.

"Hulu can be more creative with interactive advertising instead of the pre-post-and-mid-rolls that dominate presently," Leigh said. "Companies like YuMe Networks enable such interactivity. They not only enhance ad revenues, but can execute purchase transactions with the viewer."