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Jason Kilar, Hulu CEO  (Source: Patrick McElhenney/FX)
Pressure is mounting from content providers to make the switch to paid subscriptions

Hulu, a NBC Universal, News Corporation, and Walt Disney Company joint venture, has established itself as one of the most beloved video sites on the internet.  It practices a philosophy of quality over quantity, airing desirable content like television episodes from an elite group of content providers.  That means that while it may never have the net traffic of a free-for-all video site like YouTube, it has a much steadier audience and is arguably a more effective place to advertise.

Jason Kilar, Hulu's CEO, announced that the company has been profitable for two quarters now, as it enters its third year of existence.  Sources close to the company say that the company stands to make even bigger gains with the launch of the Apple iPad, for which Hulu is reportedly creating a custom app.

The company is not without some problems, though.  Hulu has 200 content suppliers, which received 50 to 70 percent of the advertising revenue from Hulu's video content.  Traffic has tripled over the last year to 903 million streams delivered in January.  Many content providers, however, are still complaining about their checks being too small.  They would prefer Hulu to adopt a subscription-fee based system.

Viacom was among the most frustrated, and it acted, pulling the plug on Hulu's rebroadcasted episodes of Comedy Central shows like “The Daily Show with Jon Stewart” and “The Colbert Report."

Still, Hulu pulled in $100M USD last year in ad revenue and could more than double that this year, according to Kilar.

Kilar reportedly is considering using the iPad as a test-bed for a subscription based service.  However, he seems wary of a user rebellion if he tries that.  He states, "Our mission is to help people discover the world’s premium content, and we believe that subscriptions can help to unlock some of that, including sports and movies and premium cable shows. We’re certainly open to subscriptions as a complement to an ad-supported model."

Another problem from Hulu is that it still hasn't delivered on its long-awaited iPhone app.  The app was expected in 2009, but never arrived; many are hoping it lands this year.

Despite these obstacles, Hulu seems unlikely to move out of the picture when it comes to internet video.  Its ability to become profitable without charging subscriptions is very impressive and hopefully content providers don't try to push to hard and mess up the good thing they started.

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Loose cable, use hulu
By Iridium130m on 4/2/2010 2:09:16 PM , Rating: 5
I really hope they make it...I'm seriously considering dropping cable, as several of my friends already have, and using Hulu instead. Even if they went to a cost effective subscription model (say 5-10 bucks a month), it sure would beat my $60 a month portion of my cable bill I pay for tv and a bunch of channels I never watch.

RE: Loose cable, use hulu
By dayanth on 4/2/2010 6:20:54 PM , Rating: 2
I've been without cable since Hulu went live. And as for movies, if it's not on Hulu then I got it on Netflix.

So for $75/month, I get my internet connection and I can rent 3 DVDs at a time and watch streaming on Netflix. Then catch all my latest shows on Hulu when they're broadcasted, even if they are 8 days later. I usually miss the shows right when they used to air on TV, so now I just watch it online instead.

Even if Hulu did goto a subscription model, It still wouldn't hurt me as much as paying $130/month for internet and cable channels that are usually filled with 3-4 minutes worth of commercials anyways. The only reason for subscribing to cable I've heard is for the children's and education programming. So if you still want to pay for cable, then I would guess that would be the only reason to.

RE: Loose cable, use hulu
By seamonkey79 on 4/2/2010 6:59:39 PM , Rating: 3
3-4 minutes of commercials is old school, nowadays, many shows are at best 50 minutes of an hour, the majority of shows are 45 minutes of an hour, and some (like 24) are about 40 minutes of an hour.

RE: Loose cable, use hulu
By vol7ron on 4/2/2010 8:14:41 PM , Rating: 2
You beat me to it.

If he's getting only 3-4 mins of commercials on cable, then I idolize his local network. That is more like what Hulu is doing (6 or so commercials at 30secs for the hour). When a commercial comes on these days, I feel like I have time to eat a pizza, take a shower, and get back w/o missing anything. They have so many tv timeouts in sports these days, that it's like athletes don't need to be in shape anymore.

What would be nastier is if DVRs stored the marked commercial data and made users not be able to f/f through them -- I shutter at that thought.

RE: Loose cable, use hulu
By theapparition on 4/5/2010 1:36:34 PM , Rating: 3
What would be nastier is if DVRs stored the marked commercial data and made users not be able to f/f through them -- I shutter at that thought.

Start shuddering.
ReplayTV marketed thier DVR in the early days as having a feature that marked commercials and automatically skipped over them during playback, and they were subsequently sued into oblivion and never recovered.
Recently, Phillip patented the system where commercials could not be skipped over or fast forwarded through. Most cable companies have been in talks with Phillips about incorporating the technology into newer DVRs. Since the content producers have unanimously adopted it, the providers will have to support it or will not get to distribute the programming.

Add to that the DTCP "No copy" flag set to be turned on in 2012 for some broadcasts, and we have a recipe for control.

Welcome to progress.

RE: Loose cable, use hulu
By vol7ron on 9/30/2010 11:01:30 AM , Rating: 2
How much is XM/Sirius-TV?
Can't we just pay $10/mo more and go commercial free?

RE: Loose cable, use hulu
By AlexWade on 4/2/2010 9:10:43 PM , Rating: 2
The only reason I'm sticking with cable is my Hauppage HD PVR. It can record HDTV programs. Tonight, Lord of the Rings comes on TBS. This will hold me over until the extended version comes out on Blu-Ray. Older movies come on channels like HD Net and MGM HD. For such movies, you won't get a better quality on Blu-Ray, so this makes a great way to get some classics in a good quality. I record the program to the DVR just to be safe, and then I transfer it through the HD PVR. I'm recording LOTR right now.

The Hauppage HD PVR is great. It records in H.264, so I also bought the VideoReDo TV Suite, which makes frame-accurate cuts in H.264. This is great the games and movies with commercials I want to keep. If I want, I use the free multiAVCHD to make a Blu-Ray compatible movie on a DVD.

RE: Loose cable, use hulu
By johnsonx on 4/4/2010 3:11:15 AM , Rating: 2
I've been pay-tv free for 18 months, and generally pretty happy (I had been on DirecTV for 10 years). I have an antenna for the local TV channels, hooked to a dual-tuner HTPC. Combined with a netflix subscription, Hulu and the occaisional visit to RedBox, I have pretty much all the content I need.

I guess I won't mind too much if Hulu starts charging a SMALL fee, but only if that brings additional content. What I worry about though is if they start adding more unskippable commercials to the free service. The 30-second commercial breaks aren't too bad, and I actually do watch them. I'd really hate to go back to the bad old pre-DVR days where you had to sit through 5-minute blocks of commercials, or go find something else to do until the show came back on.

I rarely even see commercials on regular TV any more, as my HTPC skips them automatically. Yes, someone has to watch commercials or advertisers won't pay for all these shows I like any more. It just doesn't have to be me.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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