Would You Pay $10 a Month for Hulu?
Hulu is one step closer to rolling out a premium subscription plan, according to a report from the Los Angeles Times. The web video startup is reportedly going to charge users $9.95 a month for access to a larger library of video content than is currently available through its free, ad-supported service, and could begin testing the subscription plan as soon as May 24. But are consumers willing to pay more for content that up until now they’ve been about to view for free?
Hulu has been rumored to be considering a subscription plan for some time now, with the most recent report in the New York Times hinting that it could introduce the service along with an app for the Apple iPad. The introduction of a premium subscription option could bring new revenues to the startup, which reportedly pulled in about $100 million last year. While that number is impressive by most web video standards, Hulu is said to be under pressure by its corporate parents — broadcasters ABC, Fox and NBC — to bring in even more.
And there’s the inevitable question of how many users would actually subscribe. In our own (admittedly unscientific) poll of users last year, the majority (65 percent) said they would not pay for a Hulu subscription service, and 23 percent said they would shell out only $1-$5 for one. Just 9 percent said they would pay between $6 and $10, while another 3 percent said they would pay more than $10.
Of course, it would depend on what content would be available as part of the package. Hulu users can now watch the last five episodes of most current TV shows available on the site, which includes hit series like ABC’s Lost, Fox’s 24 or NBC’s 30 Rock. Hulu’s subscription service, dubbed Hulu Plus, would include a more extensive back catalog, which could include entire seasons of certain programs.
Then there’s the question of how profitable such a service would be. As Peter Kafka points out, TV executives expect that Hulu would have to pay its parents and content partners $1-$1.50 per subscriber, roughly the same price that broadcasters are seeking in retransmission fees from cable operators. That would cut into any profits Hulu could hope to establish from the service, and that’s before it takes into account the costs associated with hosting and streaming that content to users.
Finally, it’s not clear how many users would sign up for a subscription Hulu service when there are already other attractive options for streaming video online. A Hulu service priced at $9.95 would go up against Netflix’s $9-a-month subscription plan, which includes one DVD rental by mail and unlimited streaming. Not only will Netflix have an advantage in terms of the number of videos it has (at last count, more than 17,000 titles), but it’s also available on a growing number of consumer electronics devices, including HDTVs, Blu-ray players, TiVo DVRs, Roku set-top boxes and all three major gaming consoles.
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Change the question to how many people outside of the U.S. would pay $10 a month to see all of your top shows when they are broadcast instead of months/years/never later. Watch all of us offer Hulu even more money than that to make it happen.
I’ve been saying for several years that if the studios/networks can figure out all the international licensing problems and give us in Europe your great shows for maybe 99c an episode, we’ll happily pay. Curb, House, Top Chef, Modern Family, Treme etc etc. We want them and we want them now.
Hulu, bring it! Pave the way for new app development and force the cable companies to deliver a more attractive cost model for content consumption.
this is killer if the federation to boxee and other STB HW vendors allows connections to TVs.
“The web video startup is reportedly going to charge users $9.95 a month for access to a larger library of video content than is currently available through its free, ad-supported service”
“But are consumers willing to pay more for content that up until now they’ve been about to view for free?”
Those two statements contradict each other, with only the first being true. The second is very misleading and makes it seem as if they’re going subscription-only.
Why subscription? That’s my biggest gripe with cable/sat is that I am stuck paying whether I watch or not. I’d rather use AppleTV and pay per episode.
If Hulu did that, I’d gladly pay for every show I watch.. even the ones I get for free now. But I’d never buy a subscription, because sometimes months go by that I don’t watch anything.
Short of being able to follow a few specific teams in NFL, NBA, and some MMA, I have zero interest in 220 more channels with nothing on. Unles Hulu can offer hot titles from HBO, Showtime, etc, they won’t be able to entice me into using their free service, let alone a premium model.
maybe but the back catalog better include a lot of material that’s been missing – FX, i’m talking to you.
If Hulu achieves a true on demand TV proposition, I would be more than happy to ditch my cable!
A great proposition would be to build an online offering up to a specific threshold. Let’s say I do not like sport or news, I should not have to pay for these and be able to substitute for other premium shows I would like to watch (e.g True Blood on HBO, Spartacus on Starz…)
How do you know when a company has failed to effectively monetize their traffic with advertising? They try to charge for subscriptions…
Only if it’s not geo-blocked any longer.
Ryan, I’m a Netflix subscriber and I use the Roku player to stream video content to my TV. That said, I can’t imagine that any “informed” consumer would subscribe to Hulu — given the poor quality of the content choice.
Moreover, I’d guess that most people who currently use Hulu view a very small subset of the available content on the site, and so a pay-per-view model would make more sense.
In contrast, once mainstream consumers discover the selection of high-quality TV content on Netflix — such as TV series from the Starz and Showtime cable networks — then that subscription model provides far better value for the money. Of course, the added bonus is all the free movies you can stream as well.
IMHO, the adoption of a Hulu subscription offer is therefore limited by the size of that “currently uniformed” addressable market in the U.S. — granted, perhaps outside the U.S. Hulu might gain more traction for their subscription offer.
Freemium models sometimes have a rough time retaining their traffic. Hulu, however, avoids that problem in that it’s a site that people want to visit daily. I definitely have no doubt that Hulu can get away with a freemium model.
However, as Hulu is a site that people want to visit every day, other products, like Evernote, have had problems with freemium at certain points.
Check this post out, http://www.retargeter.com/retargeting-with-a-freemium-model-long-term-roi, it talks about a pretty good way to retain customers in a freemium model using behavioral advertising.