Mailbag: Will You Pay $9.99 for Hulu's Premium Service?

Categories: 1-Featured,Internet TV,New TV Technology

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July 17th, 2010

We know you’re a Netflix fanboy and are always trashing Hulu.  Does the recently announced premium Hulu service change your mind?  Will you pay for it?

Jason K., Los Angeles

I will certainly be subscribing, but I’m not sure how relevant that is.

I am indeed a Netflix fanboy, but I am not always trashing Hulu.   I love the free Hulu and use it frequently.  When I think about Hulu’s long-term business prospects, particularly when it comes to satisfying its owners and other suppliers of content, I have some questions about the model.

A lot of those questions should get answered for good or ill once Nielsen rolls out its “TV and PC” measurement that will effectively pay the networks the same for online viewing of ads as they make on TV provided that the viewing happens within three days of the original air date and includes the same commercials.  It’s a topic that Hulu CEO Jason Kilar hasn’t addressed in any of his wooing of the mainstream media, so it will be very interesting to see how Hulu deals with it.

The Hulu premium service doesn’t change my mind much about Hulu.  I’ll certainly subscribe to it, but the real question is would I subscribe to it if not for this website and being someone who’d love to easily be able to watch Hell’s Kitchen on his iPhone?

The answer to that is “it depends,” and depends specifically on what cable network offerings are included.  If there’s pretty much perpetual HD on Demand of a season’s worth of Burn Notice, White Collar, and Sons Of Anarchy,  that I can stream to my TV via a PS3 or Xbox,  as well as my iPhone, it’s definitely enticing.  Especially if, unlike Netflix episodes are available almost immediately after airing.

But at least so far, it will lack CBS, and it’s not clear what cable offerings will be included. Will I get Mad Men and Breaking Bad in the $9.99 too?  I doubt it.  I’m sure I won’t see  the shows from HBO or Showtime that I watch and I’d be very, surprised if Starz ever cut another deal like it cut with Netflix (effectively it’s cheaper to get Netflix which includes Starz on Demand than it is to get Starz from my cable company).

Because of my viewing habits and love of sports, I won’t be cutting the cord anytime soon, so what I’d really rather do is pay Comcast directly for services similar to Hulu Plus and Netflix’s instant streaming, and just have it available online and On Demand (with a hopefully vastly improved interface).

The Golden Goose Can’t Be Slayed

Depending on what cable shows are offered by Hulu, I could see it being potentially hugely attractive to the mostly mythical (so far) wannabe cord-cutters.   But if you follow the money, it seems unlikely that the service will be so attractive that it results in much/any cord cutting.  The broadcast networks (minus CBS) might see it as a way to offset relatively low cable carriage fees, but most of the basic cable networks will not do anything to jeopardize their relatively high cable carriage fees.  It’s unimaginable to me that the likes of Showtime and HBO would do anything to jeopardize monthly subscriber fees.

Despite this I think there will certainly be an audience for Hulu Plus, but it will likely be in the 1 million – 10 million subscriber range, and not in the range of the ~100 million or so homes who subscribe monthly to some form of cable, satellite or telco television content package.

No, Really, The Golden Goose Can’t Be Slayed

For some cable networks, the golden goose is carriage fees, for most it’s the combination of those carriage fees and advertising, for the broadcast networks it’s still advertising.  These golden geese result in some pretty wacky content licensing practices specifically aimed at making sure those geese still lay some golden eggs.

For all its bluster about being overwhelmed by signup requests, the truth is no full-fledged Hulu Plus product even exists yet! It’s not clear that Hulu will figure out how to license everything it needs to license in a $9.99/mo. package.

For now that means some irritating stuff like Playstation 3 users who want to pay $9.99 a month for Hulu Plus must also pay $50 for Playstation Plus while iPad, iPhone and other non-web users can’t currently even access the full existing library of FREE Hulu  content on their devices even if they are willing to  pay $9.99 a month!

 
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