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Hulu may go all pay  (Source: Hulu)
Will such a move kill the service?

Hulu has formed itself into one of the largest video streaming websites on the web. It still has a only a fraction of the traffic YouTube offers, but many consumers and users of the web know that the content on Hulu is usually of much higher quality than the content on the average YouTube video.

The major networks behind Hulu have been offering their programs on Hulu free of charge since the website launched. The recently launched Hulu Plus service gives users access to more content and the ability to stream content to game consoles, tablets, and smartphones.

The Wall Street Journal reports that Hulu is now having internal negotiations about a significant change in how it operates.

The video streaming site currently offers its content for free, but the internal negotiations are reportedly in consideration to change directions completely and transform Hulu into an IPTV cable provider. Apparently, the major backers of Hulu including NBC Universal, News Corp, and Walt Disney are at odds on the business model with some worrying that offering the programs for free online is undermining the value of the content via other sources like DVD and reruns on cable TV.

The revamp of Hulu would have the company offering shows to paying subscribers on demand when requested. The idea is that it would be along the lines of some of the program blocks that pay TV providers like cable and satellite offer. The WSJ reports that Hulu managers know change is inevitable. Hulu CEO Jason Kilar said, "When we blaze trails, which is what Hulu is about, it takes time. “That is not for the faint of heart, and we understand that."

This comes on the heels that the number of U.S. homes that pay for cable or satellite has dipped for the first time after decades of growth. Hulu's backers fear that offering the programs for free online is simply training generations of TV watchers to feel they don’t need to pay for entertainment.

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Letter to Television Networks
By acer905 on 1/27/2011 12:35:49 PM , Rating: 5
No. Ads or Subscription. Not both.

I don't pay for cable, or satellite, and will not until there are no longer any commercials.

RE: Letter to Television Networks
By InvertMe on 1/27/2011 12:56:05 PM , Rating: 5
Completely agree. I pretty much only watch Netflix now a days because I don't watch comercials.

RE: Letter to Television Networks
By Souka on 1/27/11, Rating: 0
RE: Letter to Television Networks
By MozeeToby on 1/27/2011 1:49:51 PM , Rating: 3
Sure, but now lets run it with real numbers.

The cost of a 30 second spot during the upcoming Super Bowl is, on average, $2.6 million. Divide that by the estimated 100 million viewers and each person watching would have to pay $.03 per person per 30s time slot. Taking a shot in the dark, I'll say about 100 30s slots (50 min of commercial time), I think I'd be just fine paying $3 (I suppose $6 if the wife is watching) to skip all the commercials, especially if they could get rid of the TV time outs and just get on with the game.

Of course, the Super Bowl has the highest advertising costs of any TV event of the year and is over 4 hours long (with lots of commercial time). Most shows would be a fraction of that, closer to your $.25 figure for Skating with the Stars.

RE: Letter to Television Networks
By bah12 on 1/27/2011 1:57:33 PM , Rating: 2
100 million viewers
Flaw in your argument, Skating with the Stars although cheaper to produce and advertise on has far less viewers, so it's cost could be above the $3 mark to break even. However your point is valid the OP's $1500 estimate is way off.

RE: Letter to Television Networks
By MozeeToby on 1/27/2011 2:10:57 PM , Rating: 3
Along with fewer viewers, skating with the stars also has much, much lower costs for a commercial slot. Generally the cost of a commercial slot is proportional to how many viewers are watching (the whole point of the Nielson rating system is so that advertisers know what they are getting for their money), but for the Super Bowl advertisers are willing to pay more because there are a certain number of people (15-25% supposedly) watching for the commercials.

So, for a typical show the cost per viewer is almost definitely going to be lower than $.03 per 30s slot, combined with the fact that there are fewer commercials (the Super Bowl has a horrible content:commercial ratio) and a much shorter program, I maintain a $.25 for a 1 hour show is probably pretty accurate.

RE: Letter to Television Networks
By nolisi on 1/27/2011 2:22:09 PM , Rating: 3
More popular shows will need to be priced higher to help carry the cost of lesser watched programming

Says who?

If we're working from a free market standpoint, shows should be priced based on the production value (demand doesn't need to be considered, as this can be broadcast to as many as want via various means). Lesser watched programming would disappear as it is not as high quality of production.

This means TV news will likely be phased out as people won't want to watch it in favor of free online alternatives that gives them access to the news they want rather than what a network/advertisers decide people need to see.

This would mean consumers will ultimately drive demand for content- gone will be the days of great programming cancelled over the lack of advertiser support.

RE: Letter to Television Networks
By CharonPDX on 1/27/2011 6:43:21 PM , Rating: 2

I liked Firefly. I would have been willing to pay more for Firefly than for current "popular" shows, even ones I watch.

I liked BSG. I didn't have cable. I *DID* pay for it. $1.99 an episode via iTunes.

I liked Terminator: Sarah Connor Chronicles. When it was airing, I didn't have a DVR, so I was willing to pay to watch the episodes I missed live.

I like Mythbusters. But I'm not willing to pay $1.99 an episode. (Nor would I be willing to pay $0.99 for a one-time-watch rental. For Mythbusters, $0.99 to purchase, or $0.25 to rent would be my price points.)

I like House and Castle. They're on broadcast, so I'm willing to put up with the ads. I'd probably be willing to pay $0.50 to rent each, or $0.99-$1.49 to buy, if they weren't available for free.

And that's HD, so Apple's prices are not only ~2x what I'm willing to pay, they're also that for SD, not HD.

RE: Letter to Television Networks
By wolrah on 1/27/2011 2:41:04 PM , Rating: 2
I understand your point, but that was a terrible comparison since every single one of those shows is available for (ad-supported) free for anyone with a TV antenna.

The argument is free with ads or pay without. If I'm paying for the actual TV programming rather than just the wire that gets it to me, it had better not have ads.

I don't get why the networks seem to think this changes when we go to internet distribution. Why does it matter in the slightest if I watch House over the air on my local Fox station for free with ads or stream it from for free with ads?

As for how much it should cost, let's look at premium cable channels. Showtime, HBO, etc. $10-15/mo gets a half dozen or so channels, not a single one of which has commercials, carrying a variety of original programming and movies which have often just come off PPV. They seem to be doing just fine with a fairly limited subscriber base, so why can't I buy an NBC Universal pack for example and get commercial free *NBC, Bravo, USA, and whatever other networks they own for a similar price?

Basically the whole thing stinks of standard media company "but we like it this way and don't want to change!" failure. Adapt or die, stop trying to keep things the same.

RE: Letter to Television Networks
By jhb116 on 1/27/2011 10:01:23 PM , Rating: 2
The older among us will have to forgive you for your obvious lack of understand how TV entertainment was delivered to the masses a 30+ years ago - via radio waves - oh and how much did programming cost to individuals - nothing. Admittedly - the programming was/is very limited, however, the shows managed to survive then. There is no way any consumer should accept to pay for both commercials plus subscription.

Least we not forget these greedy bastards are closely related to the idiots taking single mothers to court for 100's of thousand of dollars. They are struggling to be relevant in a new world order......

RE: Letter to Television Networks
By Flunk on 1/27/2011 1:01:19 PM , Rating: 2
I think that's exactly the right point. If we're paying for content, I shouldn't have to watch commercials.

I suspect Hulu's new strategy will be a resounding failure. They're going from an alternative distribution scheme to competing with every cable and satellite provider in the country. I can't think of anything stupider.

RE: Letter to Television Networks
By Etsp on 1/27/2011 1:14:13 PM , Rating: 2
Cable/Satellite TV: Not Free
Cable/Satellite TV: Requires Advertisements for most channels
Cable/Satellite TV: Paid Content with commercials

Why do online streaming sites need to be held to different standards than the traditional providers? Where did this mindset come from?

The only major difference between them is infrastructure costs. That should translate to much less time devoted to commercials. If it doesn't for a time... the free market will take care of it.

By smackababy on 1/27/2011 1:24:11 PM , Rating: 3
The mindset comes from if I am using my internet connection (which I am paying for) is coming, most of the time, from the cable companies who provide the TV content as well. Having basic cable when you're already paying for the internet line it would come through is complete bull.

That and I could easily download 99% of what is available on TV for free without advertisements, therefore I should pay to receive it as such. Note* this is not my mindset, but I'm sure it is a lot of peoples.

RE: Letter to Television Networks
By FITCamaro on 1/28/2011 8:39:03 AM , Rating: 2
You will never have cable or satellite then. You will also eventually not be able to watch internet based broadcasting either. Subscription fees to watch channels will never be enough to fund the shows on TV stations except for channels like HBO and Showtime which charge far more than stations like TNT for you to be able to watch them.

I love the entitlement mentality here. If you want it free, you get the over the air network channels. Other stations have to be provided via cable and satellite for a small fee to the cable company (and then passed to you) and still have advertising.

say what?
By kattanna on 1/27/11, Rating: 0
RE: say what?
By SunAngel on 1/27/2011 12:18:05 PM , Rating: 2
I am going to assist you with this one. The sentences are mutually exclusive.

RE: say what?
By OoklaTheMok on 1/27/2011 12:24:38 PM , Rating: 5
The notion that people are getting content for free is an artificial and manufactured argument.

I remember growing up (70's and 80's), we didn't have to pay anything in order to watch TV. Programs were paid for by selling advertising. Cable was available in the 80's, and it was a reasonably priced service. But it wasn't something that you had to have.

Now these companies are demanding that consumers pay twice to watch television programs, once through a provider (cable, satellite) who pays them to carry the programs, and again through advertising.

No, thank you. That is why I gave up on satellite and cable... why should I pay money to watch advertising? I have no problem with advertising within the content, so long as I am not having to pay for the content. Or if I am paying for the content, I don't expect forced advertising.

Sadly, I know that someone is going to post some comment about how this is capitalism and people should expect to pay what the market will bare.

RE: say what?
By Targon on 1/27/2011 2:34:27 PM , Rating: 1
There is an additional piece of the puzzle you have left out. Adding the detail, you have:

Cost to produce content
Cost to distribute content to individual stations/channels
Then you have the cost the cable/satellite services need to pay to re-broadcast that channel
You also have the maintenance on things like cable lines, satellites, and other infrastructure.

Now, for most networks and channels, the channel has to pay for the content from the content provider. You have things like the actual broadcast equipment for over the air stuff, or to beam the channel to a satellite.

For cable, the cable providers need to pay a LOT for maintenance of the lines, repairs while there is a storm going on, plus adding more bandwidth. The rebroadcast costs for over the air channels can be excessive as well(look into the conflict between News Corp and Cablevision as an example). So the cable companies really have a high overhead that you just don't think about. How much do you think all those tech support people get paid? How about the customer service people?

So, we pay for our Internet connection, but Hulu and such have to pay for the right to provide the programming, plus the server space, bandwidth usage, etc... I agree that if they want to make Hulu a paid service, then it should be commercial-free, or they should charge more from the advertisers if they need more money from the advertising.

RE: say what?
By lifewatcher on 1/27/2011 3:57:10 PM , Rating: 2
Sorry, pal, but your logic is somewhat elusive to me. I can get "limited cable" for $15 and have 30+ channels (local and garbage mostly). That apparently covers the maintenance of the infrastructure. Most channels are fed through commercials. How come I'm required to pay extra to watch them? The standard cable is 2 to 3 times more expensive than the limited one.
And another question - why am I not allowed to pick a la carte the channels provided to me? The few "good" things must be bundled separately with tons of fat (programs of no interest to me).
My point is that the cable company is not charging you what they need to, but what they want to. I know, I know...such are the ways of the much praised capitalism.

Anyhow. Back to the original topic - if Hulu is capable of providing better compression than the competition, thus requiring less bandwidth and storage space, they could make a case for their subscription fees.

RE: say what?
By theapparition on 1/28/2011 11:23:49 AM , Rating: 1
Sorry, pal, but your logic is somewhat elusive to me. I can get "limited cable" for $15 and have 30+ channels (local and garbage mostly). That apparently covers the maintenance of the infrastructure.

Sorry, but you've abandoned logic.

You've made the jump to conclusion that the "limited cable" covers all operational costs of the infrastructure.

That is not the case at all. Those entry level cable plans are loss leaders. If every one of thier subscribers dropped to the limited play, the cable co would quickly go bankrupt. Those low rate plans (which are regulated to have certain pricing tiers) are only available due to the higher cost plan offerings.

And another question - why am I not allowed to pick a la carte the channels provided to me? The few "good" things must be bundled separately with tons of fat (programs of no interest to me).

I understand your frustration, but unfortunately that will never be a realistic option under current TV services. You'll end up paying far more for TV, and the choice of channels will be far diminished.

A la carte will always cost more for a selection of channels. Cost per channel will skyrocket. Then, only the most popular channels will survive, others won't be able to continue operations. That sounds good on paper, but imagine a world where A&E and Lifetime are the popular channels and Sci-fi goes under. Not so happy are you now.

Imagine only paying for services that you intend to use. So let's stop paying for social security and disability and take a chance that we won't have to use them. Those programs only work (do they even work?) when everyone pays into them, and the population growth and funding is sufficient to meet current payments. If they became optional, they'd fail in a heartbeat (even faster then they are failing now). That's pretty much analogous to how cable services operate. You have to get every channel, or the system will crash based on it's own weight.

Ratings Question
By knightmike on 1/27/2011 3:26:03 PM , Rating: 2
How do I rate a comment?

RE: Ratings Question
By digitalreflex on 1/28/2011 10:13:59 AM , Rating: 2
Instead of posting a question in the article, you log in and then select worth or not worth reading. After you post on the article it won't allow you to rate in that article anymore.

RE: Ratings Question
By knightmike on 1/28/2011 4:37:30 PM , Rating: 2
Thanks for the reply. I must have missed it.

RE: Ratings Question
By knightmike on 1/28/2011 4:50:18 PM , Rating: 2
What browser do you use? I've tried Chrome and Firefox. Are you on an actual forum or are you on the comments section under the article? I'm on the comments section. I'm logged in. I've gone to several other articles and I don't see an option to rate comments. Have I lost the ability forever because I posted on one article?

Here is the solution Hulu, pay attention
By mcnabney on 1/27/2011 1:32:13 PM , Rating: 2
You want to be IPTV, fine.

1. Offer ALL of the channels that cable/satelite currently offers.
2. Allow multiple tiers and ala carte pricing
3. Provide current and archive content

Sell me Cartoon Network, Nick, Comedy Central, SyFy, ESPN, and maybe even some premium channels.

I would pay $5-10/mo for a high quality service that provided those channels alone.

RE: Here is the solution Hulu, pay attention
By smackababy on 1/27/2011 2:04:13 PM , Rating: 2
I would easily pay for ala carte TV service, be it on my PC or my TV.

Even at like $2.50 a channel (with advertisements) and $5 for premium channels, I'd do it.

By FITCamaro on 1/28/2011 8:45:37 AM , Rating: 2
Agreed. My bill for that would still be under $40 as opposed to the $65 I pay now.

By Sahrin on 1/27/2011 12:20:17 PM , Rating: 5
...the owners of Hulu all broadcast TV networks (well, in their capacity as content providers)? Aren't they, by definition, giving their content away for free + advertising already? So when they say "training a generation to not pay for entertainment" I guess they mean except for TV and radio?


Listen guys, if there was a legitimate IPTV service I would gladly pay for it. But if you're going to offer the same or less functionality as broadcast TV (that is, temporary availability and ad-supported content) you'd better offer the same price. I'm not paying *more* because you're delivering the content over the internet instead of your extremely expensive to construct-and-maintain broadcast network (which also happens to be a massive waste of wireless spectrum).

Quit trying to have your cake and eat it to. I don't want to - that's why I'm using Hulu instead of Bittorrent. You're getting ad sales, you're getting viewers. Don't tell me I should be paying something that you're giving away for free if I walk away from my $1,000 computer and sit down in front of a $300 TV.

Kabletown merger
By nafhan on 1/27/2011 12:56:37 PM , Rating: 4
Will such a move kill the service?
I think it's entirely possible that at least one of Hulu's major stakeholders (e.g. NBC's new parent company) wouldn't be very upset by that outcome.

Goodbye Hulu
By Spacecomber on 1/27/2011 12:31:43 PM , Rating: 2
Hulu's backers fear that offering the programs for free online is simply training generations of TV watchers to feel they don’t need to pay for entertainment.

When they take out the commercials, then, it will be free. Right now, their content is no more free than over the air broadcasting has ever been free. So, are they saying that over the air television needs to be rethought, as well, because it is fostering expectations that undermine cable and satellite tv?

In any case, I don't pay for cable or satellite, because there isn't sufficient value in what they offer. I can just as easily do without Hulu, too, if they think their content is worth more than the time I spend putting up with commercials.

By cubdukat on 1/27/2011 4:00:46 PM , Rating: 2
Did you really think Comcast would leave Hulu be once they got their hooks into NBC Universal? And yeah, I think they're behind this.

Oh, well, I guess I don't need to see "it's Always Sunny in Philadelphia" that badly. I'll just wait until it hits DVD...

"The whole principle [of censorship] is wrong. It's like demanding that grown men live on skim milk because the baby can't have steak." -- Robert Heinlein
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