Will Hulu Do the Subscription Dance?

Streaming video provider Hulu may be moving to a subscription model. That’s according to a report in the Los Angeles Times and a host of online rumors. The plan, which reportedly would be rolled out at about US$10 per month, would cover episodes of television shows older than the last five — an archive charge, essentially.

“The trend says that if it’s worth presenting, it’s worth paying for,” Carl Howe, director with Yankee Group, told the E-Commerce Times.

As more and more services that started free through the Internet begin to shift their revenue models, they can be successful “if they get the pricing right,” he added.

No Longer Only Game in Town

Where Hulu may be behind the curve, though, is in its estimate of its position in the streaming video realm. “When they first started up, they were the only game in town,” explained Howe, “and they could have rocked the world. Now, they’ve got a really strong competitor in Netflix.”

Although Hulu holds second place in the streaming video game — only YouTube serves up more video per month — it is fast seeing its user base pitched to from all sides. Netflix, for example, offers an extensive library of movies in addition to whole seasons of popular television series both on DVD and for instant streaming. The lowest monthly subscription price for unlimited streaming currently sits at US$8.99, a dollar less than Hulu’s speculated rollout price point.

Cutting the Cord

Perhaps even more complicating is the fact that more and more consumers are starting to want to consume their television content on the go, and on their mobile devices. The introduction of Apple’s iPad makes the subscription decision an application issue in addition to a pricing one.

For example, ABC recently released an application for the iPad that has seen over 200,000 downloads in just a few days. ABC is, of course, a competitor to NBC, one of the partners, along with Disney and News Corp., in the Hulu venture.

Netflix also has an iPad app, and more are likely to come down the pike now that the much-fabled Apple tablet has launched. The line between laptop and palmtop has blurred once again, and, according to Josh Martin, senior analyst with Strategy Analytics, that line will move more toward the application model for subscription-based services. Examples include MLB.com and various subscription radio services.

To Ad or Not to Ad

There’s no word yet on whether or not Hulu will continue to serve up advertisements, a la traditional TV programming, on Hulu’s free streaming model, or whether they’ll have a place on premium shows users watch on subscription.

For those accessing such content on a mobile device, the ads would use up “precious time,” noted Martin, both in terms of accessing a hotspot and conserving battery life. Services such as Pandora Internet Radio recently have begun offering premium subscriptions that exclude advertisements but kept their free streaming Internet content available.

Television programming, though, differs from audio in both the bandwidth required and the time required to consume it. In fact, Martin noted, much of the mass mobile market doesn’t even have “30 minutes at a clip to sit down and watch content.”

Thus, when going mobile with a video subscription service, Hulu and competitors may want to consider ways to “chunk up that content in easily consumable ways,” he advised.

Hulu had better figure it out fast, though, according to Howe. “They’ve got competitors springing out of the wordwork,” he warned.

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