AR&D Reinventing Local Media

Posted: Oct 30, 2009 9:01 AM

A topic of discussion of late has been the idea that Hulu will lead to the death of the broadcasting and cable model. A couple of prominent executives have made this allegation, even as it's hinted that Hulu will start charging for content in 2010. So, to keep balance in the TV universe, does Hulu need to be a subscription service? Would such a plan work, or would it spell a quick end to the popular site?

News Corp. President and COO Chase Carey fired the first shot at last week's OnScreen Media Summit in New York. (News Corp. is a major stakeholder in Hulu.)

"I think a free model is a very difficult way to capture the value of our content. I think what we need to do is deliver that content to consumers in a way where they will appreciate the value," Carey said. "Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business."

So, how does Hulu's CEO, Jason Killar, feel about the company's future? He tells Broadcasting & Cable Hulu isn't exactly giving away the store for free. Killar says a revenue model is in the works, and that doesn't happen overnight. On the "cannibalization issue," he notes that 50% of the content on the site has not been available to viewers in the past year. It's all about (OK, half about) the archives.

Meantime, over at Motely Fool, Anders Bylund pulls no punches, saying that Hulu will become irrelevant if it tries to charge:

If Hulu goes through with this harebrained plan, it will become a niche player at best. That's if the site provides fancy new features to paying customers like no ads, premium shows you can't get on Hulu today, or backrubs from the stars of The Girls Next Door. Even then, Hulu will not be the fairly mainstream power player it is today. To stay relevant to the mass market, Hulu needs to stay free.

If nothing else, Bylund notes, Hulu serves to keep the video pirates at bay. Without it, people just share TV shows on services like BitTorrent. At least with Hulu, there is some ad money and control to be had.

Meantime, Jeff Bertolucci at PC World says he'd pay for Hulu… but only if it improves a bit. Jeff would like a "Hulu-On-Steroids" model that hosts a deep archive of "every episode of every TV show or movie ever made." He's using a little hyperbole, but you get the idea. He wants a Rhapsody of TV. Jeff lists his "Five Ways I'd Pay for Hulu" in a well thought-out article.

I strongly believe that a pay-for-Hulu model will not be a success right now. Bertolucci is correct - the services need to evolve vastly. But I'm also are certain that Hulu will continue to roll out more features, making it a more compelling pay play. It may not be that we subscribe to the Hulu site itself. We may wind up paying our cable companies for access to Hulu straight through the TV. CNN.com has proven we'll pay for iPhone apps. There will be consumer revenue here. Killar is absolutely right: the key here is patience for Hulu and an understanding by traditional media companies that Hulu is not a death knell: it is a great hope.