Hulu: Changing the Face of Free Broadcasting

Rumors have spread like wildfire concerning a subscription-based Hulu. As of late October, the free video streaming website ranked number 36 on the list of most frequently visited sites, with 21.5 million global users making visits each month. The convenience of free, on-demand television with limited advertisements is enough in itself to draw people’s attention and help soften the blow of piracy. Up to this point, Hulu has been a free service funded by advertisements. Despite the fact that large profits have been made by the developers and employees of the site, that income came to a peak back in April of 2009. News Corp properties, a company comprised of Fox News, 20th Century Fox, The Wall Street Journal and others, brought in Jonathan Miller (formerly of AOL) as their new chief digital officer to try and boost revenue. Miller proposed an array of ideas to get Hulu back on track, but the one that seems to have stuck is the idea of changing Hulu’s model to that of a subscription based package. Though to this day nothing has been confirmed by Hulu executives, Miller has expressed his ideas on this new business model publicly. He said that while Hulu will continue to stream TV and movies for free for the time being, moving towards a paid medium seems like “over time [it] could be a logical thing”.
Miller also expressed some of his ideas surrounding how Hulu would make the switch. For now, everyone on the board is playing with the idea of having limited free content available while keeping the bulk of the media reserved for paid subscribers. Though no one has made a public statement on these terms, it would definitely be a great way for users to ease into the new business model. In keeping some content free of charge on the site, executives hope to keep a strong fan base while continuing to grow as a website. The other less favorable outcome would be to turn Hulu into a service dedicated to paid subscribers. Miller shared some ideas on how the site would run this theoretical service. In his opinion, bundling together popular TV shows and movies by genre and lifestyle has the most appeal to a general audience. In an interview with Daily Finance, he stated, “I think you have to figure out what are the right bundles that people buy and what’s contained in that bundle. For example, you could have — and I’m making this up entirely — you could have a New York bundle, and that could consist of various papers or publications that are relevant to the audience in New York, and you could make that all, potentially, a bundle to a consumer at one price.” In this quote he is speaking relative to the newspaper business, but is convinced that the same type of bundle packaging would apply to Hulu users alike.
The fact that nothing has yet been confirmed by Hulu executives only feeds fire to the growing rumor mill. At this point it’s safe to say that Hulu will remain a free website until the end 2009 and into the beginning of 2010, but speculations on both the company and audience sides all point to some sort of paid service expected to launch by spring of next year. Whether or not this is a smart business move will be determined by members of the board and frequent users of the popular site. Currently, many people who use Hulu also download content illegally, yet would sacrifice the time and effort put in to obtaining said material to watch it for free online with two thirty second advertisements mixed into the clip. If Hulu does decide to change to a paid-subscriber only service, we can expect to see an immense decline in internet traffic and revenue for the site, which could ultimately lead to its demise.

by Jamie Anderson



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