By Barry Levine / CIO Today. Updated April 22, 2010.
One part of the future for TV watching may soon emerge. According to a new report, the popular online video site Hulu plans to start a subscription-based service.
A report in Wednesday's Los Angeles Times said a subscription of $9.95 per month will be offered on May 24. It will allow users to see current TV series episodes older than the five most recent shows. The most recent programs will still be available free, with ads. The Times attributed the information to "people with knowledge of the plans."
The new service will be called Hulu Plus, and will provide access to the backlog of shows from such popular series as Glee, Lost and Saturday Night Live.
Hulu, owned by News Corp., NBC Universal, and the Walt Disney Co., has taken in more than $100 million in advertising revenue since its launch two years ago, and the company said it has had an operating profit in the most recent two quarters. It offers content from a wide range of more than 200 content providers, including ABC, Lionsgate, Endemol, MGM, MTV Networks, National Geographic, Paramount, PBS, Sony Pictures Television, Warner Brothers, and others. For TV alone, Hulu's library includes more than 1,700 series.
Hulu's place in the emerging media ecosystem -- and especially its plan to generate revenue beyond advertising -- has been a constant subject of discussion among industry observers. There has been an expectation that, sooner or later, it would need to begin charging for some of its TV and movie content.
Dmitriy Molchanov, an analyst with industry research firm Yankee Group, said the basis of the new subscription offer will be that it provides access to more content than what users can otherwise get. This kind of move is necessary for the site, he said, as it "needs to do more to bring in revenue."
Is Cable's Future More Tiers?
He also said that Hulu "needs to be connected to more devices." In addition to web access via computers, the service has begun to show up on video-game consoles, high-definition TV sets, and smartphones. For instance, a new high-end smartphone that will reportedly be released by Dell before the end of this year includes an integrated Hulu application.
Molchanov said Hulu has sometimes resisted device alliances, such as an ongoing dispute the service has had with Boxee, a cross-platform "social media center" which allows users to watch movies and TV while social networking. "Hulu is beginning to offer a service that will compete with some aspects of cable," he said, so it should be working with as many devices and services as possible.
As Hulu continues to offer more programming on demand and subscription services, he said, there will continue to be some ways that it can't compete with cable, such as sports programming, which is a main attraction for a significant number of cable subscribers.
"It will never be able to match cable," Molchanov predicted, but Hulu could begin to compete by offering deep access to TV programming after the initial airing, and to classic programs. The most likely way that cable will respond, he said, is to develop many more tiered programs, where users can buy the slices of programming that most interest them.