Can Hulu Make Subscriptions Fly?

Hulu is reportedly about to expand to a range of other devices, following in the footsteps of Netflix’s successful move to the iPad, Xbox, Roku box, Wii and now the iPhone. The price point that has been reported in the past is $9.99 per month. It’s not clear if that would eliminate commercials, however. My suspicion is no.

It appears from the recent Reuters report that Hulu will likely provider broader content access to subscribers:

Hulu, which generated an estimated $100 million in advertising revenue last year, will continue to offer newer episodes of shows like Fox’s “Glee” free of charge, but it will also charge viewers a monthly fee to see older episodes and other content, two of the sources said.

Given that consumers have long demonstrated a willingness to pay for movie rentals and cable TV, the market is arguably already conditioned, especially by Netflix, for the Hulu paid service. But given the fact that people already pay for cable there may be a reluctance to embark on another monthly subscription. Also the question arises: will Hulu expand what’s available to paying customers (as the Reuters article suggests) or will it remove some of what’s available for free, perhaps in addition to an expanded offering on the paid side. The former approach is more likely to succeed.

Mobile TV has failed in the US, because people are unwilling to pay for it. But Netflix on the iPad (and soon the iPhone) is a success. Why? It’s partly because of the brand and nature of the service and partly because of the broad array of content available on Netflix. Also the user experience Netflix created  on the iPad is terrific. Mobile TV has been very uneven.

YouTube wants to go into this area as well but it’s not clear that the site can make the transition. Past experiments with movie rentals have largely failed.

Hulu has developed a much stronger brand for “premium” content and I believe there’s at least some willingness out there to pay for what it has to offer. That same “demand” doesn’t seem to exist with YouTube, which also has less professional content.

One reason why this is interesting to me is because its a free model moving to a hybrid model. This is challenge even more acutely faced by newspapers as they try and negotiate a similar transition. However newspaper content has been massively devalued by the “commoditization” of news online. Only a few publishers are likely to be able to gain any meaningful subscription revenue from the PC Internet. Tablets may turn out to be a different story.

Then there’s the interesting angle that asks how these emerging services on TV and other devices will impact cable: Netflix + Hulu through a set-top box or Google TV (or a comparable service). There’s lots of pent up demand I believe to ditch cable for cheaper and more flexible services such as Netflix and/or Hulu on “all my devices.”

The cable companies will obviously try and block or pre-empt this scenario. Let’s talk in three years and see where we are.

Would you be willing to pay a monthly fee for an enhanced version of Hulu and at what point would you cancel cable?

2 Responses to “Can Hulu Make Subscriptions Fly?”

  1. Dave Says:

    I canceled my nearly $90/mo DirecTV subscription a year ago in favor of over-the-air and Hulu. (I’m not a big TV person as most of it is rubbish.)

    I would definitely pay $9.95/mo for a Hulu subscription if 1) it doesn’t lock me into an annual contract 2) they continue to carry a decent selection of programs and 3) they don’t price it above $10/mo. I can live with ads as long as they stay away from turning a 42 minute program into a 42 minute plus 18 minutes of ads program. That would make me reach for the eject handle.

    Having it my iPhone would be a nice bonus too. Guess I’ll hang onto the unlimited data plan to see how all this shakes out.

    Are YOU LISTENING HULU? Don’t go crazy and blow it.

  2. Sandra Says:

    I personally haven’t used hulu yet, but I have heard from several friends that are hulu users that it is a great option to keep up with your shows, post feedback, contribute to discussions and write your own reviews. You can also rate videos, follow TV series, and when a new episode of a desired show appears on Hulu, it is added to your list of videos to watch. Thanks for the article!

Comments are closed.

%d bloggers like this: