Hulu pushes forward with $9.95 subscription service
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Hulu, the popular online site for watching television shows, plans to begin testing a subscription service as soon as May 24, according to people with knowledge of the plans.
Under the proposal, Hulu would continue to provide for free the five most recent episodes of shows like Fox’s ‘Glee,’ ‘ABC’s ‘Lost’ or NBC’s ‘Saturday Night Live.’ But viewers who want to see additional episodes would pay $9.95 a month to access a more comprehensive selection, called Hulu Plus, these people said.
Hulu, which ranks second only to Google’s YouTube in terms of monthly video streams in the U.S., said it turned an operating profit in its two most recent quarters. The 2-year-old service, which is owned by media giants News Corp., NBC Universal and the Walt Disney Co., generated more than $100 million in revenue from advertising.
Still, that doesn’t come close to matching the revenue that these companies are accustomed to raking in from their more established businesses. That’s why Hulu is under pressure from its owners to collect a subscription fee to both bolster revenue and train viewers to pay for online access to professionally produced content.
Television executives don’t want to suffer the same fate as music industry or newspapers, which saw users flock to free access to songs, stories and classified ads online -- and revenues plummet.
In the past, Hulu primarily offered shows that were broadcast over the air for free. But now, as the major networks are trying to extract payments from cable operators and television station groups, they can no longer justify offering the same shows online for free. Shows on Hulu also carry commercials, however there are fewer spots there than on regular television. Ultimately, Hulu is expected to adopt the same commercial loads as network television.
Hulu did not immediately respond to requests for comment.
--Dawn C. Chmielewski and Meg James
The Hulu video player displays a scene from ‘Arrested Development.’ Credit: Twentieth Century Fox and Imagine Entertainment.