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 (s AAPL) 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 (s DIS), Fox (s NWS) and NBC (s GE) — 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 (s nflx) 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 (s tivo) DVRs, Roku set-top boxes and all three major gaming consoles.
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