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As I was finishing up my review of Hulu Plus, Om Malik raised the idea that Hulu might be considering one of the options I planned to suggest: an ad-free version of its new premium subscription service. Turns out the answer is yes — and no. When I asked CEO Jason Kilar by e-mail if an ad-free option was under consideration, he called his comment “theoretical” but didn’t rule out the option for the joint venture of Disney (NYSE: DIS), News Corp (NSDQ: NWS) and NBC Universal.
“There’s nothing that prevents us from considering an ad-free version of Hulu Plus,” Kilar wrote. “As with all of our product decisions, a key factor is that we always gauge whether there would be sufficient consumer interest in a given product or service. We are a start up and we are very disciplined about how we invest our precious resources.” (From my experience, disciplined is putting it mildly. Kilar also holds the Hulu road map close to his chest, usually not publicizing a product or feature before he thinks it’s ready for launch.)
I also asked if such a service would have to be offered at a higher price, something I assumed was the case but wanted to check. Kilar: “If there were to be an ad-free option, yes, it would need to be at a higher price. Why? It is important that we compensate content owners fairly, and the advertising component of Hulu Plus enables us to do that, while offering consumers the device access, incremental content, and HD resolution at just $9.99. Without that advertising revenue, the delta would need to be made up for in the form of a higher subscription price.” How much higher — $5, $10, more — is another question.
The current Hulu Plus version isn’t the result of tossing darts at a board. Kilar says the “overwhelming feedback’ from thousands of consumers during the product design stage was “that they would vastly prefer a lower priced subscription service that was made possible by modest amounts of advertising (which, as you know, is approximately half of what is found in traditional distribution).” I probably would have answered the same way but experiencing the ads over the past week across devices has me wishing for an alternative.
Kilar isn’t releasing specifics about invite requests, subscriptions or app downloads, but says they have been “humbled” by the consumer interest in the first 8 days of Hulu Plus. The real tests are yet to come — how many people stick after the first month, for instance — but the careful rollout means Hulu should have a steady influx of new subscribers for the foreseeable future and plenty of feedback. If enough people say the ads disturb them to the point of leaving or considering it, that ad-free option might not be so theoretical.