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For a glimpse at Hulu’s future, look to Japan

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Hulu Japan officially launched Thursday, kicking off the online video service’s entrance into its first international market. But unlike its ad-supported TV catchup service in the U.S., the Japanese version comes with a few minor differences that could give a hint at what Hulu might look like in the future.

A higher subscription fee, but no ads

A big knock against Hulu Plus has always been that unlike Netflix, (s NFLX) which runs ad-free, those who pay for Hulu’s $7.99 a month service are still exposed to ads. Hulu Plus reportedly has a lighter ad load than its free, ad-supported version, but an ad load nonetheless. Hulu has long-defended this dual revenue stream, saying that it’s no different than how users who pay for cable TV are also exposed to ads.

Advertising also helps defray the costs of content licensing fees. In a recent blog post, Hulu CEO Jason Kilar wrote:

“Today, we proudly and profitably pay the content community approximately $8 per subscriber per month for the content offering you see today on Hulu Plus. A portion of the $8 payment to the content community comes from our $7.99 subscription fee; the balance comes from the revenue we generate through advertising.”

But Hulu Japan doesn’t carry any ads. Instead, it launched with a ¥1480 price tag, which comes about to a little less than $20 U.S., based on the current currency exchange. Hulu could possibly extend this to the U.S., something that it has even hinted at in the past. In July, Hulu’s Twitter account even mentioned that the company was considering the option of a higher-priced, ad-free subscription here.

More content partners, including CBS?

Interestingly, Hulu Japan includes content from CBS, (s CBS) which has been the lone holdout in its U.S.-based TV catchup service. However, those expecting CBS shows to also appear on Hulu’s U.S. site shouldn’t get their hopes up. For one thing, licensing content for syndication into a foreign market will just add incremental revenue, while not really competing with its own distribution platform at home.

In that respect, this isn’t really any different than CBS making its content available to new Netflix subscribers in Latin America. If Hulu were to move to an ad-free subscription service in the U.S., we could see some slight possibility of CBS content showing up — but if so, it would be mostly long-tail library content like old episodes of Cheers or Star Trek, which it’s made available on other distributors like Netflix or Amazon Prime. What you won’t see is the type of next-day access to current shows on air that broadcasters ABC, NBC and Fox provide.

In addition to CBS, available programming includes content from NBC Universal’s International Television, (s CMCSA) Sony Pictures Entertainment, (s SNE) Twentieth Century Fox, (s NWS) The Walt Disney Company Japan (s DIS) and Warner Bros. (s TWX) NBC Universal, Disney and Twentieth Century Fox parent News Corp. (s NWS) are all stakeholders in the joint venture, but the addition of film content from Sony and Warner Bros. is a welcome addition.

Still for sale, still evaluating bids

The launch of Hulu Japan comes at the same time that the company’s board is mulling offers from potential acquirers. Hulu has reportedly attracted attention from companies including Google, (s GOOG) Yahoo, (s YHOO) Amazon (s AMZN) and DirecTV, (s DTV) but the price of Hulu and which content rights it comes will be key sticking points as they evaluate its worth. While most attention is being paid to its U.S. operations, the Japanese launch and the possibility of other international operations could provide an lucrative and important new revenue stream, especially if the service takes off there.

3 Responses to “For a glimpse at Hulu’s future, look to Japan”

  1. Glenn Allen

    I remember when having “cable” meant getting channels without commercials–all channels were considered “premium”. That’s certainly no longer the case. That’s why I don’t subscribe to cable any longer. I tried hulu PLUS for a couple months, for free… didn’t notice any fewer ads than for “regular” hulu. Even without commercials hulu isn’t worth almost $20; maybe at $7.99, but not much more than that.

  2. I live in Japan & to sign up to Hulu I have to pay the $20. No thanks. I already pay monthly for my cable TV service & ondemand videos, so no way am i paying another subscription. If it were free, with ads, or even pay-as-you-go, I might consider it. But no way am I subscribing to a monthly fee.