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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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By sapiens74 on 4/2/2010 6:35:26 PM , Rating: 2
Content providers always want to charge you as many times as they can.




By lainofthewired on 4/2/2010 7:16:39 PM , Rating: 2
"Many content providers, however, are still complaining about their checks being too small. They would prefer Hulu to adopt a subscription-fee based system."

And if they pull out? This is money that they wouldn't be now making. I mean, if they take their stuff off Hulu, people will go back to torrent or Youtube. I wonder if they don't see that...


By foolsgambit11 on 4/2/2010 11:40:17 PM , Rating: 2
I'm sure Viacom backed out as a bargaining chip to try to pressure Hulu into a subscription model. Either that, or they figure Hulu viewing is eating into their other revenue streams - people don't watch the Daily Show live (when they'd receive even more ad revenue) when they can watch it at their leisure on Hulu, or they don't buy DVD's of the shows, or they cancel their Viacom cable subscription because they can watch the shows they want online.

I wonder how many people would continue using Hulu if it went to a subscription model, though. I'm assuming they've run the numbers and figured that they'll make more off the few remaining customers than they do off their current (and expanding) customer base using ad revenue alone. On the other hand, if you're going to make people pay for something they used to get for free, Apple products seem to be the place to start - iTunes worked great for mp3s.


"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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