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Hulu made its name by turning a seemingly bad business idea into a widely popular website. Before the site launched, techies dubbed the television network focused web venture "Clown Co." And for the past two years, Hulu has impressed many with the quality of its content and viewing experience.

But as advertising revenues have dropped and his other properties flounder, Rupert Murdoch has been dropping hints that the company will soon charge for access.

News Corp. Deputy Chairman Chase Carey laid it on the line this week, saying that Hulu will begin charging for content in 2010. Putting Hulu's video collection behind a paywall has the potential to choke off its viewership and tank a thriving business. That said, the potential to charge a subscription fee is clearer getting News Corp. hot and bothered. So here are a few ideas that Hulu could use when it starts charging for content next year.

Hulu is currently selling enough advertising that it's close to breaking even with its current content. Cutting off access to those shows could greatly inhibit Hulu's efforts to gain prominence online (and compete with efforts of a web giant like Hulu). So for starters, it's important to keep the current content available for free.

News Corp. seems to get that point. Peter Kafka at AllThingsD notes that Hulu has not made any inclination towards charging for the content currently on its site. So here are my top five freemium tips for Hulu:

  • Get more extensive programming and charge for it.
    If the price of online video ads ever gets as high as the rates charged for TV ads, online video can serve the same function for brand advertisers as old media ads once did. Hulu's ad rates are already rising, but that model only works for network television. Hulu has had trouble getting the rights to certain cable and film content because the revenue sharing won't work out in the same way. But if the network can get access to that content (which cable providers are currently vying for) they could also charge a good deal for it.
  • Give subscribers on demand video.
    Hulu has a nice viewing experience. But it could be a lot better. If they could get access to enough content to let viewers flip through seasons of their favorite shows, that would be a valuable subscription service.
  • Charge for pay-per-view video.
    Hulu needs to leave quality content available for non-paying customers. But there are plenty of shows and series that people would pay to watch once. If Hulu could get a viable video rental service going, it could take them pretty far.
  • Give premium subscribers ad free (or lite) content.
    The benefit of online video for many networks is the unskippable nature of online advertising. But for viewers, it's often an atrocious viewing experience. By offering this option, Hulu can also test out the effectiveness of its advertising. If viewers are routinely opting out of its commercials — or if the site gives the option of watching a specific series ad free — it could also get a quick lesson in which ads are working. And which are simply pissing off viewers.
  • Give subscribers offline viewing access.
    The freedom to watch television whenever you want is enticing, but finding an internet connection is not always easy. Viewers who want free online video can deal with real-time streaming. But offline viewing is a nice perk that many people would pay for. Hulu already offers this service, but you'd barely know it (I just spoke with an entertainment writer that uses Hulu daily, and he didn't even know it existed). This functionality could be handled in a more efficient and obvious way as a competitive alternative to the iTunes store.

And one more, for good measure...

  • Charge for early access to shows.
    This isn't likely to happen any time soon, as networks hate leaking their content early. But there is definitely a market of people who would pay for early access to their favorite content. News embargos are already going into the trash bin. Letting dedicated viewers see your content early — even if it's only slightly so — could ring some extra dollars out of people who care most about your programming. (And give them a way to show they care with their wallets.)
Meghan Keane

Published 23 October, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (3)

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Philip Wilkinson

Some interesting ideas there Meghan, especially around giving premium users a better experience, exclusive content, priority on download bandwidth, larger format video etc..

In a way, following the route Spotify is doing with music (offline viewing, snacking, no ads for premium, mobile apps)...  but for TV and Film.. 

almost 7 years ago

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Doktor Thomas

If a person is already paying monopoly inspired fees for cable TV or going the weathered route of dish TV, it seems unlikely s/he would pay again to see what s/he missed. So a "premium Hulu" subscription has a low threshold number of potential joiners. More importantly, there will be a squared proportional relationship; as Hulu subscription charges arise or rise, the number of hackers and torrent distributors will square, substantially muting the "those who will pay" audience. Bootleg viewers will continue to enjoy that that should remain priceless.

If a person has neither overpriced TV broadcast methods (US), what is his/her commitment to viewing old TV reruns? More on point, what might that person pay for used episodes they wouldn't pay for in the first place? Realistically, little.

Whatever is on TV is already paid for by a formula making the networks substantially more dollars than they deserve. Internauts are unlikely to help also-rans like Murdoch make more, or even succeed, with re-warmed TV/video. If Rupert wants to produce good entertainment (sadly lacking on TV) and sell that; then he is onto something that might catch on. But that takes talent, charisma and foresight which Murdoch's Hulu plan demonstrates is lacking.

Viewers, or potential viewers, are more likely to pay for substantially better ad blockers than premium re-heated TV. The neat thing about the Internet is 8 billion people being on equal footing with corporate greed mongers. And without board meetings individually boycott the evil corporate empires. The umpires strike back!!!

The most glaring underlying flaw in the "I'm going to kill off Hulu" plan is the ongoing devolution of TV and movie production. I disconnected Time-Warner in December 2005 and haven't looked back. Hundreds of wasted hours saved, not to mention $2397.60 in cable fees saved and $131.89 in sales taxes. Frankly, neither entity deserved that money. Get your calculators out, please.

TV was superior entertainment when it was broadcast free--the audience wasn't captured. The program of the day had to be top quality to keep the audience. Now with subscription TV, it can be any flotsam (and it usually is) and the viewer is stuck for options. It is obvious none of the major networks care about viewers: absorb their Soylent TV or GF. The number, length and brainlessness of TV commercials is insulting to everyone outside of a mental ward. Yet they are more pervasive than ever. Why anyone watches is a mystery. And, now RP will have you pay again to re-broadcast the old and serve up more insulting streamed advertising. No thanks, I'd rather play with my blog.

almost 7 years ago

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carlost

Micropayments might be a viable option.  Charging say  $0.10 to watch each show.  Their bandwidth cost would be approximately $0.01, maybe 1.5 cents.

almost 7 years ago

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