Since the launch of the most popular streaming TV website in the United States, there has been plenty of Hulu hooplah. But critics have argued that the ad-supported hulu.com was lacking a sustainable business plan – until now.
On Tuesday, Hulu announced the launch of Hulu Plus, a subscription-based service meant to bolster revenue and attract U.S. subscribers who might be unwilling to pay lofty cable fees.
The service, currently in preview mode, will cost $9.99 (U.S.) a month. Like the website, it is only available to American consumers, since Hulu partners with content providers to put shows online legally, and the digital rights to do so are not international.
However, the move has widespread implications for the future of the TV business in an online world. NBC Universal, News Corp. NWSA-Q and Walt Disney Co. DIS-N all share an ownership stake in Hulu, and the networks they own – NBC, Fox and ABC – will make their programs available through Hulu Plus.
Unlike cable and satellite companies, which make a healthy profit from subscribers, networks do not receive subscriber fees. Charging for network shows on digital platforms is so far a largely untapped source of revenue.
The service makes Hulu available on devices beyond the computer, including a much-anticipated application for the iPad, the iPhone and iPod Touch. It will also be accessible through certain Blu-ray players, Internet-connected TVs, and gaming systems. The company says support on other devices is coming soon.
It will most likely attract younger viewers who are more accustomed to watching video content on computers and other devices, said Mark Fratrik, an economist and media analyst with Chantilly, Va.-based BIA Kelsey Group. Hulu Plus, which will run ads in its shows, could benefit from a younger following.
“That’s an important group for advertisers to get to, 18-34 year olds spend an awful lot of money. … There’s increased competition in video program delivery. It’s changing.”
TV distributors are responding to those changes, too. NBC Universal is poised to merge with Comcast, meaning the cable provider will soon have a piece of Hulu as well. And in February, HBO launched its website HBO GO in the United States, which restricts access to Verizon subscribers. The strategy is known in the industry as “TV Everywhere.”
During a December, 2009, conference call to discuss the Comcast-NBC deal, Comcast chief operating officer Steve Burke told analysts that “Hulu and TV Everywhere are complementary products.”
“We are big believers in trying new things and trying to come up with innovative ways to get content out over these platforms,” Mr. Burke said, “and having this much content with our distribution company, we think is going to allow us to provide new things for consumers, which will help our distribution company in the process.”
The trend has come to Canada as well: TV distributors have been launching their own websites with access for their subscribers only, including Shaw Communications Inc., Rogers Communications Inc., Bell Canada, and Quebecor Inc.
While Hulu’s free site will continue to exist, the paid service will include a library of older episodes of its TV shows, as well as complete series that are now off the air.
“This is just the first step in our mission to bring you TV wherever you are,” Hulu’s chief executive officer Jason Kilar wrote in a blog post announcing the service Tuesday. “We are already hard at work on porting Hulu Plus to other devices and platforms. … There are more shows to license, more countries to expand into, and more product features to build.”
