News Corp. Exec: Hulu to Charge in 2010

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Hulu is planning on charging for at least some of its content starting as early as 2010, according to News Corp. Deputy Chairman Chase Carey. Broadcasting & Cable reported that Mr. Carey made the comments at the Broadcasting & Cable OnScreen Summit earlier this week, where he said, "It's time to start getting paid for broadcast content online."

Hulu is an online streaming video service offering TV shows and movies for free, supported by paid commercials that can't be skipped. The service is a joint project by NBCU, News Corp., and Disney, and it was started in part as an alternative to Apple's iTunes when NBC broke with Apple over a disagreement on pricing for TV shows on iTunes.

Mr. Carey, who sits in News Corp.'s seat on Hulu's board, said, "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,. Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business."

B&C said that not all content will be subscription based, and the intimation from Mr. Carey was that any fees cold initially be built around premium content. There was no hint as to whether or not commercials would be part of the subscription model the company is looking to implement.

Comments

daemon

There’s definetly room for some paid content on hulu, HBO, Showtime, and Cinemax can all easily command decent subscription rates.

JeffB

I would not subscribe to Hulu with it’s current level of content. Right now I have a single dual-tuner DVR and on occassion there will be a third show on at a given time that I would like to watch, but can’t due to watching one and already recording another. So my easy solution is to not record one of the three shows and make sure it’s one that appears on Hulu. I current watch an new episode on Hulu every other day during the week.

I’d sooner get a second DVR box for another room in my house and solve my problem that way then pay for Hulu.

I would subscribe if Hulu got more recent movies much like Netflix’s streaming, or if Hulu had HBO tv series up to watch since I don’t option for HBO in my cable package.

Lee Dronick

I wouldn’t be willing to pay for the content if I have watch adverts

Mathew

Unless they greatly expand their available content to include more than just the recently aired episodes, there’s no way in hell I’m going to drop money on hulu. Especially considering the options available to get the same shows which are in no way cumbersome or trying.

Colleen

While I find Hulu to be a valuable site for watching shows I happen to miss, I cannot imaging paying a subscription fee to access these shows. As other commentors have noted, the level of content is extremely limited and for most shows you are already paying by watching commercials.

Unless a system was set-up where I could subscribe specifically to a premium channel show, say True Blood on HBO, I would not pay for the service. Even then, the subscription price would have to be less than the cost of a full HBO subscription from my cable company, or in my case less than the price I am able to talk a rep down to for the 6-8 months the show airs.

Dale C

They start charging, I delete the bookmark, that simple. If I want paid programming I’ll watch my cable tv.

John Martellaro

The old business model is to boil the customer’s frog.  That worked when people didn’t have many alternatives.

The new business model is “free,” with a behind-the-scenes business model that can work. The fact that Hulu execs are starting to think about charging means, to me, that they’re panicking over revenue—derived from inexperience about how to develop new business models combined with products that surprise and delight.

Damien

Good luck with that. Charging someone to watch old tv shows when most allready have dvrs’ etc is stupid. The whole draw to hulu in the first place is that it is Free. Charging for it will have people going elsewhere.

Shawn

Hulu fail.

Frank K

First, I don’t pay for cable. I have old fashioned rabbit ears + converter box.  If they are going to put me through commercials, then why should I pay for it?  I used Hulu as a convenience, to catch shows that I may have missed(such as House and/or Heroes on at the same time).  Hulu is a great service, but a lot of tv networks are putting their shows on their websites.  If Hulu starts charging I guess I’ll just go to the network websites and view from there instead.

dave

This mr carey sounds like a dick:
“I think what we need to do is deliver that content to consumers in a way where they will appreciate the value..”

Lol! So I can only appreciate the shows value is by paying for it? Screw that. There are other websites where I can get my shows without subscription and even without ads. All this will lead to is isolate the Tv Networks even more from their viewers, who in return will be forced to Torrent and use illegal methods to get their shows.

Greg

We don’t subscribe to cable or watch over the air. (In fact, we use our computer as a TV)

Hulu (and Netflix) has been awesome in filling the TV void! I wouldn’t mind paying for it, if:

A) The charge is reasonable (say, $5.00 a month)
B) There are a *lot* more shows and movies to watch
C) The advertising remains the same or lessens

Most people in our area spend $50 a month on cable. We’ve been cable-free for 2.5 years now, and have saved about 1,500 in that time.

I hate advertising. I hate paying for cable with its low “signal to noise” ratio. But I would definitely miss free Hulu!

Jack

Right now, I’m typing this waiting for a hulu episode to load.

My internet is usually reasonably fast, most sites I have no trouble accessing.

Youtube videos load almost immediately.  But, for whatever reason, if I want to watch Hulu, I have to plan in advance to wait for the video to load.

Sure, Hulu is great, few commercials, lots of good shows that are hard to find elsewhere, easy to use, but honestly, the wait to load alone makes it barely worth my time.

They start charging, I’m going elsewhere.

mchampag

It’s time to start getting paid for broadcast content online.

Isn’t that what the advertisements are for?

John Martellaro

Other industry observers are also commenting in the same vein:
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=116043

John Martellaro

My understanding is that Hulu is having a hard time being profitable with the current, limited, advertisements.  Internet viewers won’t put up with 18 minutes of ads per hour, so Hulu had to limit ads, hence revenue. It’s all a sign of an inadequate business model.

Anyone watch “Castle” on ABC?  The Nikki Heat novel is out at Amazon.  Rumored to be ghost written by James Patterson.  Now THAT’S business imagination.

geoduck

Wow, it would have been nice if Hulu had been made available here in Canada before they screwed it up.

daemon

My understanding is that Hulu is having a hard time being profitable with the current, limited, advertisements.  Internet viewers won?t put up with 18 minutes of ads per hour, so Hulu had to limit ads, hence revenue. It?s all a sign of an inadequate business model.

I watch Hulu on my 50” HDTV, I built myself a HTPC five years ago, and I would have no problem if they added additional advertisements than the 15 second ones I currently watch.

James

I have to add my two cents. I already don’t watch anything on Hulu because of the advertisements. It just doesn’t make sense in this day and age. As mentioned in the article, the old model of revenue is just quite simply dead-it’s not coming back, the genie’s out of the bottle, etc., etc., blah, blah, blah.

I really wish the media corporations would just accept it so we could all at long last move forward. Sigh.

Bryan Chaffin

I have to add my two cents. I already don?t watch anything on Hulu because of the advertisements. It just doesn?t make sense in this day and age. As mentioned in the article, the old model of revenue is just quite simply dead-it?s not coming back, the genie?s out of the bottle, etc., etc., blah, blah, blah.

I really wish the media corporations would just accept it so we could all at long last move forward. Sigh.

James, do you think the media corporations are going to keep producing this content you take for granted out of the goodness of their hearts?

Your post here suggests you have a massive disconnect with reality on this issue.

When enough people become freeloaders stealing content, the content will stop being made. That’s true here at TMO just as much as it is at NBC or Disney.

studentx

When enough people become freeloaders stealing content, the content will stop being made. That?s true here at TMO just as much as it is at NBC or Disney.

They are already making money hand over fist or they wouldn’t be producing these shows in the first place. Hulu is just “another” avenue for them to make money. The problem is that they will have to offer a lot more content and take into account that these shows have to be downloaded on broadband that we are already paying for.

Who wants to wait an hour for a download on a connection your already paying for, some of which are bandwidth redistricted, be forced to watch ads along with a subscription and have less content available than what is play on a day’s worth of cable TV? NOBODY!

Bryan Chaffin

Your writing makes me sad, studentx.

While I’m at it, your grasp of the current economics of the TV business is just as lacking.

daemon

Bryan, I find the auto reload of this website frustrating. How can I turn it off?

iJack

While I find Hulu to be a valuable site for watching shows I happen to miss, I cannot imaging paying a subscription fee to access these shows.

Hulu isn’t an alternative to TV, but rather a convenience.  I use it for exactly the same reason as Colleen, and sometimes to try out a TV show I have never seen before.  I have paid for watching the shows already, through my DirecTV subscription, and I will not pay again.  I don’t mind the commercials on Hulu, because there is only one per break, and none are longer than 30 seconds.  If in fact they do start charging, I shall simply turn to NinjaVideo, or one of the other pirates, and watch it for nothing, at the same high quality, and without any commercials.

As my ol’ Daddy used to say, “a man should never pay twice for the same piece of real estate.”

iJack

The Nikki Heat novel is out at Amazon.  Rumored to be ghost written by James Patterson.  Now THAT?S business imagination.

BRILLIANT!

genevish

I have paid for watching the shows already, through my DirecTV subscription, and I will not pay again.

No, you haven’t paid for it.  You paid your cable company to bring the shows into your house.  You pay for the show by watching the ads.

I’m with you Bryan.  The growing tendency of young people today to think they are entitled to free content is a disturbing trend that will continue to erode the quality of content available. 

The evidence of this trend already exists.  Look at news networks today.  They are increasingly moving away from responsible journalism and towards sensationalism to attract viewers. 

This is a disturbing trend…

partner

One way that the networks can prevent people from skipping or avoiding commercials is to integrate them into the programming. That’s what movies frequently do with product placement, and the approach dates back at least to the dawn of commercial radio. As long as it doesn’t completely ruin the shows, people will put up with it. ;-/

Some shows (e.g. Transformers, Captain N) are still pretty good even if they are essentially extended product advertisements.

An intrinsic disadvantage of this approach, however, is that it’s (intentionally) very hard to change (or remove) the advertising once a show has been made.

Networks can further monetize television shows by licensing and/or marketing products based on the programs, including toys, games, books, posters, boxed sets with various goodies, breakfast cereals, clothing, soundtrack CDs, etc..

There are several TV shows/games/movies that I *wish* had associated licensed products, but sadly they do not exist!

partner

I?m with you Bryan.? The growing tendency of young people today to think they are entitled to free content is a disturbing trend that will continue to erode the quality of content available.?

There’s a simple economic reason why anyone - not just “young people today” - might expect content to become free, or at least incredibly cheap: zero marginal cost. In a perfectly competitive market, the price of a good should approach the cost of producing one more unit of that good. For digital content (music, movies, TV shows, books, pictures, software, video games, etc.), the cost of producing one more usable copy is essentially zero.

One challenge for content producers in the digital era is to figure out how to make money when the marginal cost of their product is essentially zero.

Producers of new content may find it very difficult to compete with distributers of old content who can easily undercut the price of the new content and still make a profit.

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