Hulu is a brilliant service which has truly brought American television to the online masses. Part of the appeal of Hulu is the fact it’s free, with revenue coming from a purely advertising-based model. But certain parties want to change all that. Could Hulu survive the transition to a subscription-based model?
Hulu – Hot and Getting Hotter
Being British, I’m jealous of Americans for one reason and one reason alone – Hulu. Yes, we get to watch BBC programming on the iPlayer, and there are a number of other online TV catch-up services either already present or about to launch in the U.K. But Hulu offers American television at its best.
Hulu is massively popular in the States, having around 40 million viewers at the last count, who between them watched nigh on 500 million video streams. Which is surely cause for celebration amongst the partners behind the project.
Viewing Figures Vs. Revenue
However, viewing figures will only get you so far, with it all coming down to revenue and profit in the end. And on this score Hulu is still failing to score big. It’s estimated that the company will make losses of around $33 million from expected revenue of $164 million in 2009.
And this clearly isn’t pleasing the head honchos at NBC, News Corps. or Disney, the last partner to join. In particular, and rather unsurprisingly, News Corps. chairman Rupert Murdoch doesn’t seem to enamored with the current situation. And NBC Universal CEO Jeff Zucker agrees.
Content Partners Speak
According to Multichannel News, both spoke at the Goldman Sachs Communacopia conference on Sept. 15. Murdoch started by suggesting that Hulu is being eyed with alternative forms of revenue channels in mind. He said:
“Are we looking at it with a view toward adding subscription services and pay per view? Yes we are. No decisions have been made yet.”
While Zucker seemed less sure pay models were the future but also didn’t rule them out, particularly in the long-term. He said:
“I don’t think anyone predicted we would be this far along after 18 months. We are ahead of plan and we have more than 200 advertisers at Hulu.”
“We are going to continue to be as innovative as anyone on monetization of the ad-supported model, that’s really where our focus is today.”
“Whether there are other ways to monetize Hulu down the road, it is something that we are open to, something we will explore, but there are no plans at this time.”
Could A Pay Hulu Work?
There are clearly people out there willing to pay for content over the Web, with streaming rentals and digital copies selling well across the Internet. However, that’s not how Hulu has been set up and I can see a lot of people dumping the service without a second thought if they were suddenly asked to pay for the privilege of using it.
It’s likely to be many years before online video advertising catches up with TV revenue, if ever. But does that mean the advertising-based model should be abandoned? Especially as top-rated shows such as The Simpsons and CSI can command higher CPM advertising rates on Hulu and the like than they can on traditional TV.
