It appears that television executives are attempting to solve the problem that has plagued the music and publishing industries for years: with so much available free access to songs, articles and videos, how do you charge online audiences for professionally produced content?
Last week, insiders close to Hulu, the free streaming video service, reported that the site plans to begin testing a pay subscription-model as soon as May 24th. The well-sourced rumor is that Hulu will still provide for free the five most recent episodes of shows like Fox’s “Glee” and NBC’s “Saturday Night Live,” but viewers wanting older episodes will be forced to shell out $9.95 per month. According to an April 23 article in Los Angeles Times, the proposed “Hulu Plus” will charge users a monthly subscription fee to access a more comprehensive selection.
Hulu says that in its most recent quarters, it turned an operating profit. “The two-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,” says Company Town, the Los Angeles Times’ entertainment industry blog. But apparently, $100 million wasn’t enough for Hulu’s owners, hence the pressure on the site to charge a subscription fee. There is also a plan for Hulu to “adopt the same commercial loads as network television,” so users who are accustomed to the virtually commercial-free episodes can kiss that luxury goodbye, too.
At first, $9.95 per month doesn’t seem so awful. A small price to pay for the television catologue Hulu is promising, right? But when I think about potentially paying $120 a year on top of my cable subscription, something just doesn’t click. That’s a pretty hefty fee for free television. Especially for viewers that already own and pay for a DVR. This report from Multichannel News says that in households with over $75,000 in annual income, DVR penetration is at 54 percent and broadband penetration is around 89 percent. While some people speculated a few years ago that online television would replace cable subscriptions, the reality is that a lot of consumers have both. It seems to me that instead of paying Hulu for content, DVR owners will just get a little more disciplined about recording their favorite shows.
Hulu Plus hasn’t rolled out, so the success of the company’s subscription plan remains to be seen. In the meantime, it is just another illustration of the media industry’s attempts to, as the Los Angeles Times dubbed it, “train viewers to pay for access to professionally produced content.”
