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Hulu Hints at Pay Model

June 3, 2009

Hulu is in the news again. There’s an article on Daily Finance titled “Soon, you’ll have to pay for Hulu.” (sensational title, isn’t it?)

According to the article, Jonathan Miller, News Corp.’s newly-installed chief digital officer, said he envisions a future where at least some of the TV shows and movies on Hulu are available only to subscribers.

This makes complete sense to me and something that was foreshadowed with Hulu Desktop’s launch. Hulu needs to find a way to monetize content and offering a premium subscriber service is the best way to do this. Of course, most people don’t think about the business issues at hand. If you look at the comments under the Daily Finance article, you’ll see a lot of posts on how “stupid” studio execs are and how this would be a horrible move by Hulu (these people are probably the same group who joined in on the Clown Co. name calling pre-launch).

First off, nowhere did Miller say that ALL TV shows and movies on Hulu would cost money. He said some. Second (and this is important), he didn’t detail what the future state of Hulu’s inventory would look like, meaning the total inventory could be significantly greater than it is today.

What I think will happen is Hulu will keep a similar inventory of sample episodes and movies free to viewers just like it is today, and then upsell premium subscriber-based services for additional content (e.g., all past seasons of 24 in addition to the current season). The total inventory is going to go up significantly so that there is enough content to maintain a free base service as well as premium services. This should keep current viewers who aren’t willing to pay for content satisfied, while also capitalizing on the segment of people who are willing to pay for access to more content (and may be willing to replace their current cable subscription).

Makes perfect sense to me.

UPDATE: NewTeeVee is taking a poll on how much people are willing to pay. I’m sure that people are filling out the poll based on the current state of Hulu, which I am sure is going to change. So it’s not surprising that so far, the majority would not pay.

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