Saturday, April 24, 2010
Hulu attempts to monetize -- My reaction
The time has finally come.
This week, Hulu brass announced their intentions to start charging for certain bundles of content.
Pay content on Hulu will begin "testing" on May 24 under the moniker "Hulu Plus," which will see a $9.95 monthly subscription base for content past the usual four-to-six new episodes of current series.
This is something that has been discussed all through media circles for over a year, including my proposal just a few months ago. So obviously, there are a variety of opinions on the matter. All Things Digital's Peter Kafka wonders if it's both too much and too little. VideoNuze's Will Richmond says that's definitely too late for Hulu to successfully try something like this. And PaidContent's James McQuivey thinks it's about time.
In a weird way, all of these opinions on the matter seem right to me. 120 bucks for something that people thought of as "free" less than a week ago is a steep fee -- especially from the jump. Moreover, three years in, people are now so used to and expect Hulu to be free that paying for content isn't going to set that well with them. If we've learned anything over the years, it's that you cannot give people something for free and then flip the switch to make them pay.
That is why, as I suggested previously, Hulu should have introduced more variety into their pay structure. That $10/month fee will scare people away from the get-go. Heck, I can even see some people moving away from the service totally because maybe they've only heard parts of the story and think that the fee applies to all videos (Some people are dense). I understand the need to try out a pay model in some way, but going too far, too fast might lead Hulu to lose some brand loyalty that they should not have if they implemented both a $5 and $10 option.
However, I can see the arguments for $10. One, it seems the content that people use Hulu for (seemingly, since there are not released data points on this) is brand new episodes they missed the night or week before and based on the stories, all those episodes will still be free. Thus, most Hulu users might not be affected by this at all. Though, on the other hand, if most users only use the content that's remaining free, the revenue earned from the pay tier won't be worth it anyway.
Secondly, we are still unclear of what will behind the Hulu Plus paywall. If they're going to offer full libraries of series, even series they don't offer now, then it might drum up some interest from people. If they offered, say, all eight seasons of 24 or all six seasons of The Office paying $10 a month could definitely be worth it to some people. In that respect, not much different from Netflix.
Except, Hulu is still only offering computer-based content, which brings us to the final point: the app. We all know/hope that there's going to be an iPad application released within the next year and if Hulu decides to charge for the app and then pair it with this pay plan, there could be a nice little bit of revenue earned there. But without that, or without any non-computer-based viewing possible, the subscription feels less effective.
This story is going to keep changing and only get more compelling as we go on. Soon, I'll write up some thoughts about what these means for the industry.