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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)

I wouldn't mind paying a subscription fee if it means I get to see all available videos, new and old, without commercials and it allows me to view the shows on any device I choose. That's why I really like my Netflix subscription. It allows me to view the movies I want to see in a variety of platforms (DVD, PC, iPad etc.) for one price.

The operative word that wrankles me is "train". Train viewers to pay for content. Like a barking seal in a carnival? Like a toddler learning not to wet himself? Forget it! I will not be "trained" by the likes of Comcast, NBC & Fox. They can take their content and flush it as far as I'm concerned!

I enjoy some of the older hulu shows, like "Alfred Hitchcock Hour". I'd gladly pay for it on DVD if it were available. But it's not. Neither is the 3rd season of Night Gallery. I would pay 20-30 dollars per season to have these in my personal collection, but not $10 per month to lease them. Sorry.

I would use it, actually. At least until Hulu starts adopting longer, more annoying commercial breaks, or if they limited the commercial breaks for paying subscribers. I don't have cable and my reception is terrible, but there are some shows I'd love to watch in their entirety on my own schedule.

Why would I pay for Hulu and Netflix when I can get everything I want on Todou for free?

Because it's marginally easier!

I am happy to pay $10 a month for Netflix's wonderful services, and I've been a satisfied customer for over a year now. Their software learns what I like and recommends streaming videos that I want to watch.

(If only it worked on Linux.)

Hulu needs to accept that it's not competing with basic cable and Youtube, but rather with pirate sites like Todou and Megavideo.

Hulu for $10? Better be in 3D!

If the current offerings don't change for the free accounts, then I don't see how this is a terrible idea by Hulu. What I want to know is if there will still be ads displayed for those paying?

Also, if Hulu eventually becomes as ad-heavy as regular TV, instead of their brief 30-second breaks now, a lot of people would go back to pirating those shows. I don't mind 30-second ads at all. 4 minutes of ads is just dumb.

I'd be interested to see what % of that $100MM rev was profit.

Otherwise, this seems like a really foolish move. Because when push comes to shove, I'll go do something else.

-They Can have the revs from me watching their ads while I revisit past episodes of "Burn Notice" in the off-season, but the buck stops there. I'm not paying $9.95; so they'll just lose what they could've earned in those extra ad impressions.

++If the Paid service ends up having the full load of broadcast/cable ads on it, then that's an even bigger slap in the face.

I don't want to sound like a Commie internet kleptocrat, but the execs making these decisions are coming off as overstepping abit.
$AdImpRevs or $0.00, TV execs; take your pick. -Because $9.95 is not on the table.
That money went to ATT Wireless, FiOS Internet, Cable TV, Verizon Local+Long Distance, and ISPs waaay before I ever got to Hulu.com.

It's funny. This is a great illustration of the difference between Apple and Network exec type thinking.

--The iTMS and AppStores are run at ~just over breakeven. Why? All that heat and attention brings a lot of juice to the brand and the hardware.
-Could Apple try to squeeze blood from a stone? Yes. -But they're smart enough not to.

Obviously Hulu's execs aren't that smart.
+They clearly don't need any more energy directed at their product offerings + cultural organism.

(ex:) -Because, that unexpected other show I just got into, as I was looking for something else in-category on Hulu, and actually started watching faithfully both On-Air and Online? -->Oops!; that Grassroots Cross-Pollenization just died. (for me those shows were: "Castle", "Human Target", "Archer", and "Community")

Back to YouTube, or NetFlix, or The Guild, or Blogs, or Facebook, or Internet Radio, or Reading, or eBooks, or Twitter, or IM, or XBox, or PC Games, or a billion other things, then...

*I guess there are just no Philosopher Kings at networks, only reductionist pinhead accountants with no idea how people daisychain into or out of their shows, what a knife-edge the audience rests on, and just how high the current Marginal Rate of Substitution really is.

Bra-vo, execs! -What's your next trick?

I'm watching Hulu right now and I mean it's great and everything, but clearly not worth $10 a month. How do they think this will make them money?

The only possibly way I would consider forking over a subscription fee...

is if there are ZERO ads.. not one. Since it appears they want the subscription and want to increase ads, I do not see myself actually considering spending money.

Their content is simply ... not worth it to me.

"generated $100 million in ad revenue," during when? the last 2 quarters or the last 2 years? very unclear.

I already have cable and pay to watch ads. Why would I also want to pay hulu and watch more ads. Ditto on all the previous comments. Goodbye hulu. Free hulu with ads will be as bad as regular television with ads. I will buy and watch more DVD/Blu-Ray content before paying more.

There are so many places online where you can watch t.v. for free. Maybe they should talk to Megavideo, who started restricting free users to 72 minutes at a time, and charging $9.95 a month to remove that restriction. Viewers found a way around that rather quickly.

Plus, there are so many databases of free links to online channels where you can watch whatever you want with NO commercials without even having to download, why would people pay Hulu? The best thing about Hulu is that with such short commercials, you can watch more shows in a shorter time frame. Adding commercials is going to kill them.

I suggest they consider making commercial free part of the paid model if it has any chance of surviving.

Very good idea, better get into monetising before others too. Public knows quickly what to expect.

Dara Bell

Since Netflix already offers similar pricing for a better service (has both ad-free streaming and DVD rentals), Hulu's plan doesn't make sense.

I'd pay $10 if there stream was as good as Netflix.

I love giving money away! Sign me up!

I'll pay, but only if they increase the back-catalog, too often there are episodes missing, probably to try and make you buy the DVD's.

Hulu aka: Screwu, Gotchu, and Huknuw!...lol! Ok, lets say I want to buy and entire season show of Lost on DVD, that'll cost me $50-60 dollars with NO COMMERCIALS!. Ok,now, Hulu wants around $ 10.00 "per month" just to let you back watch shows one didn't see in the mid season which would cost close to $120.00 a year wether you watch anything or not! So which you you rather do? Break your neck to see Lost episodes because yur now paying for it or just say, I got the DVD and I can watch my Lost episode anytime I want..please Hulu, don't make "Neflix and Ps3 come after you"..lol!...peace.

It is a bummer, I just got this set up at home via a media server to my Seagate free agent.. and now this.. oh well.. I WILL NOT PAY for such a service. I have enough choices to avoid pay stations/

I don't mind this so much. Having the 5 most recent episodes online is fine. The only thing I'd ask is that they have some kind of cheaper 1-time access. Say I ONLY want to watch one Episode of Community that I missed and didn't realize it. I don't want to have to play $10 to watch one ep. I'm going to find somewhere else to go to do it.

Big Companies dont understand the Internet world. Just like the record industry if you take away the my ability to watch my shows on Hulu FOR FREE im just gonna pirate them like EVERYONE ELSE will as soon as this Hulu Plus bull drops.

Guaranteed theyre user view will drop 50% or more...GUARANTEED!

I'd rather record the shows on DVR and skip right through those damn ads.

This article smells like greed. Hulu is turning a profit... but it's not enough of a profit. The execs want Hulu to eventually carry the same ad load as TV. Has anyone ever thought that DVR and Hulu have been popular because you don't have the same ad load as TV?

I would be okay with this as long as you were able to watch new shows during their airtime with the paid service, and not have to wait a day. What would be even better is if you could watch new release movies with the paid service. That would then allow them to compete with netflix a little. I personally don't mind the ads on Hulu as of now. watching 1-2 minutes of advertising throughout a 30 minute show is a fair compromise compared to TV.

"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."

Train me to what? Train me to go elsewhere and get what I want the WAY I want it? Im so sick to death of the content providers wondering why what they do doesnt work all the while talking down and dictating to me as a customer. I dont think so. Hulu held some value for me before now, but I already use the hell out of Netflix and so Hulu has just lost what little attention they held foro me.

I'd consider it if there were more selection and no adds. It seems like an on demand cable plan but without having to subsidize the cable box.

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