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Hulu pushes forward with $9.95 subscription service

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.

Comments () | Archives (134)

First, I won't pay for Hulu Plus. It's just not that important to me. There are other legal ways to get entertainment.

Having said that, we should understand how expensive it is to produce quality scripted programming. I don't mind paying a little so we actually have something besides reality show drivel (cheaper to produce) to watch.

The production industry is getting squeezed and if we're not willing to pay for their work we're the ones who will suffer in the end.

What major television and movie studios must understand is that the Internet is a truly disruptive innovation. You cannot and should not try to mold it in the likeness of television and cable tv. I have recently over the past couple of years learned to use the Internet (Hulu, Netflix, etc.) to view my favorite shows and even live sports events. I was so impressed with the convenience of viewing that I discontinued my cable subscription because it is overpriced for the content. I believe if Hulu does this they will lose quite a bit of their customer base. In the near future I can see a different type of production studio, one solely focused on the Internet, that will develop a business model requisite for such a low cost distribution method. The Internet cannot be tamed by large corporate interests.

It would be one thing if the platform were natively accessible via more platforms than JUST a PC/Mac. Netflix is the other mega player in the streaming space and IMO they're nailing this model by getting their service out there on as many platforms as possible (PC, Mac, iPhone, iPad, Windows Phone, Roku, web-connected TVs, Xbox, PS3, Wii.) Greater distribution therefore fits into any space in your life - at the computer, on the go with your phone, or on the couch watching via your TV. The more places I can use it the more it'll become ingrained into my daily life - and the more I can justify paying for it.

The biggest difference between Hulu and Netflix though is the commercials. Hulu wants/needs to be able to know about who is seeing their spots in order to be able to sell the ads. Since you can access a lot of their content without registering they can't know that via other platforms (whereas they can gleam/scrape more off the PC side.) Still, either partnering with an established source with demographic data like Xbox Live or just requiring registration for distribution on other platforms would quickly remedy this issue. This is what happens when traditional media companies enter a different space though. They're actually doing a lot of things right, but it's sort of a two steps forward one step back situation.

The reason I use Hulu is that I don't pay for it. $9.95 a month isn't worth it. The fact is that people have been trained to pay for television content, which is the reason only 1% of subscription television subscribers dropped their subscriptions after the digital transition last year. Wait until people realize that HDTV is free, and for most Americans, easy to receive.

A lot of negative reaction to what seems to me a reasonable plan. Hulu is still offering free access, it just means you have to watch the free episodes before they disappear. I would gladly pay the $9.95 per month provided the following: (1) they expand their line-up, which will probably be difficult and (2) they figure out a way to let subscribers view content when traveling outside of the US.

I've wanted to watch old episodes on Hulu before, but not enought to pay $10 a month. If I could watch an old episode a la carte for $1 or something, I might get suckered into doing it here and there.

Never have used Hulu. Thought I might check it out. Guess not. Why would I pay for TV? I still own an actual television set.

I agree that $10 is too high, but I also think expectation on the part of too many consumers that any content online must be free is short sighted. Why do we expect content providers to give us with all this stuff for free? Same thing with iPhone apps. People moan and complain whenever any application is more than 99 cents. It's all a bit ridiculous. If we want artists, journalists, programmers to keep creating cool stuff, we need to pay for it. I think part of the problem is that the cost of broadband is so high that people feel they've already paid once for access to content, in the same way that they pay cable fees to get access to channels. But the cable companies pay the channels to carry them whereas the internet providers don't do the same thing for websites. Something needs to change. At least give hulu credit for keeping the free option rather than moving entirely to a walled off site.

I'd be willing to pay hulu $5/month for access to a large back catalog and reduced number of advertisements. I doubt they will get many takers for the $10/month, especially if there will still be ads.

Hulu should not charge users it should charge higher advertising fees by having users select the ads they want to see from a list of ads they can better target their ads to the consumer this is worth something. I would rather see all of the ads up front then have commercial breaks during my movie.

Wrong Wrong Wrong subscription model! I would gladly pay say $1 or 99 cents to watch a particular episode of a show I really really liked. If it were streamed live at the same time it shows on tv or even just a few hours later that would be even more compelling. But I would never pay $10 a month or whatever for a whole slew of rubbish tv just to watch episodes of the 2 or 3 shows I like. That's why I stopped subscribing to Comcast. Hope hulu gets wiser and doesn't go down this route.

Not paying Hulu a nickel. I'll uninstall the Hulu app from my computer and I'll just go download the TV shows that I want to watch another way. If they want to get greedy and start charging a ridiculous fee for this then they won't even get the advertising revenue for having me as a viewer. Way to nickel and dime your viewers Hulu. I'm sure you'll be forgotten about before long.

My layman's opinion is that $9.95 will fail in much the same way NYTimes.com failed in charging for it's op-ed pages.

My bet is that a smaller charge of say $4.95 will end up making them more money with more subscribers.

I may be completely wrong, but it seems to me that people will have way more incentive to by DVDs and Blu Rays of shows they want to watch old episodes of.

I can understand wanting the profit, but I don't see people spending 10 bucks a month in addition to cable/satellite/DSL fees.

Hulu should have a list of ads in different ad categories such as sports, fitness, out door life inc. Then the consumer can pick ads that they are interested in. Hulu can then charge a higher per click fee to the advertiser.

I love using HULU, but I would never pay something for it, I could dvr it. That's so dumb, they already made money on the shows the first time they came out, then they make money on it again through the advertising on HULU and then they want to us the viewers to pay as well? How do they think that's gonna even work?

Dear Hulu,
Unless I can download videos to my computer, so as to watch without buffering and/or when offline, you cannot have my $10.

As previously mentioned, everything on hulu.com is also available on torrent streams or on pirate video web sites FOR FREE. All they are doing is ensuring that the traffic to those web sites will skyrocket. People are already paying for the content through their cable TV bills, and they are paying for their internet service. They are NOT going to pay again for content. They'll either become more diligent about setting their DVRs or VCRs, or they will "steal" it from free sites. NO ONE is going to pay for content that is available elsewhere at no additional cost. No one.

If Hulu is going to start to charge for subscriptions, I'll not be using Hulu. There are plenty of underground websites with most everything Hulu carries, plus the episodes that they don't.

I'll never buy the subscription. I pay $36 a year for unlimited access at Pandora.com....that's worth it! Accessing other shows on hulu for $10 a month, $120 a year....not going to happen. I already have netflix...so i'll just have to wait for tv shows to go on dvd. And if you make hulu 100% accessible only through purchase...then you will 100% lose me as a customer. My tv is free!

Pay for Hulu no way. I rather have the two DVD option on Netflix and get their streaming library they have a better movie selection and although they do not have recent episodes they have a great selection of TV shows with no commercials. Not to mention comperable to the ten dollar fee I also get two movies at a time with netflix. I will not even go to the Hulu site anymore they are just so greedy. Didn't they have commercials with Alec Baldwin talking about Hulu talking about it being different and free. NOT ANY MORE.

I don't mind paying for something if I think it is worth it. But I barely ever visit Hulu's site as it is, so can't see myself wanting to pay that much for premium content. They could make the entire site subscription-only and I wouldn't miss it.

Wonder if this means NBC will remove their instant watch content off netflix now to at least try to strong arm a few users to pay for Hulu.

Tivo and the DVR killed the TV industry. DVR's are made possible by the very cable and satellite systems the networks a battling with.

When they do load up online editions of TV shows with broadcast amounts of advertising, enterprising programmers will create DVR type programs that record the online show and play it back sans commercials, and it will be better than DVR's. You won't fast forward, the program will remove commercials altogether

The networks are pissing the wind

It's funny how many people can conceive of paying $10/mo. for streaming access to an archive of old television shows when Netflix is making a killing charging pretty much the same amount for streaming access to an archive of old movies.

I look at it this way - I use Hulu to watch recently missed shows. For older shows, I use Netflix. Though TV series tend to be DVD-based and not available for streaming on Netflix, that's fine with me. Cost-effective all around and I get to enjoy the content I care about.

In case you haven't noticed, Netflix is proving that millions of people are happy to pay $8.99 for unlimited streaming, including old TV shows. Fact is, studios need to make a profit to produce content. As advertising revenues slide, they're forced to charge willing consumer directly. And willing consumers there are -- as proven by NFLX, WSJ.COM, FT.COM, etc. Plain and simple.

Downloading shows "illegally" is a minor inconvenience, but I can get it in HD and without commercials. I'll pay for convenience, but $9.95 a month is WAY too much to watch something that you can get for free over the air. Plus they are heading towards adding MORE commercial, not less? How does this benefit the consumer? If they want any sort of widespread adoption, they need to make it worth my while.

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