Newscorp.'s Hulu has been threatening to put up a paywall, and today the company announced the rollout of Hulu Plus. Details are scarce on the new program — it is reportedly only availaible to a beta group of 10,000 — but it looks like Hulu is devoting itself to a device-centric payment model. If cable networks have anything to say about it, Hulu could be shooting itself in the foot.

According to AllThingsD, about 10,000 people now have access to Hulu Plus. For those select users, a monthly charge of $9.99 gets you access to additional shows and content that free Hulu users can't see. Additionally, it means you can watch Hulu's digital videos in more places — especially the iPad. But it's not just limited to mobile. Internet-connected TVs, Blu-ray players and game machines from Samsung, Sony and Microsoft will be able to broadcast Hulu content.

This device-centric approach is interesting, especially for those who use Hulu as their primary video source. $10 a month is a lot cheaper than terrestrial cable subscription rates.

Hulu says it has 120 seasons and 2,000 episodes available in its premium product. But there is also not a lot of cable content available. Even shows owned by Hulu partners, like FX's “Justified” and Bravo's “Top Chef,” aren't included.

For consumers, a Hulu product that can send video content to TVs could be a great alternative to cable subscription. But, that's exactly why cable networks are reticent to give Hulu their content.

And that's part of why Hulu's one size fits all premium model could hinder its revenues.

Sites like Boxee are working on a la cart pricing of content. By passing on their costs to consumers, they're making it an easier decision for users. If you want specific pieces of content, you'll pay for them.

Baljeet Singh, YouTube's senior product manager, says "Our goal is to increase happiness with a lot of our content owners. We've played around with different models. Right now we're full force on advertising."

Why is that? Because consumers want free content. And if digital video purveyors build payments into their existing cost structure, they can both keep consumers happy and (hopefully) get content creators on board.

As Henrique De Castro, Google's vice president of  global media and platforms said today at a journalist lunch, the issue is cable and film studios' windowing strategy. Video content is closely guarded by its creators. Films must go through theaters, dvd sales and before getting released for rental. That's why, he says:

"You'll see us covering all that spectrum with a different mix of monetization. There's going to be be a continuum between ad supported and user paid."

Hulu charging a flat flee for premium content is going to be a hard strategy for revenue. Mostly because they need to undercut cable companies if they want users to fork over for a monthly subscription video charge. But that's exactly the people providing their content. 

Meghan Keane

Published 29 June, 2010 by Meghan Keane

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

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