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Rupert Murdoch's News Corp is frantically trying to monetize its digital properties. As part of that plan, popular video site Hulu recently added a premium version that costs $9.99 a month. For consumers looking for high quality video content online, it's an interesting model. But there's one catch.
According to new research from One Touch Intelligence, 88% of the content available on Hulu Plus is already available on Hulu for free.
Hulu Plus is only two months old, and its content library will likely grow over time. But out of the over 28,000 pieces of content now available on Hulu Plus, only 3,345 are not accessible from Hulu.com.
According to One Touch, Hulu Plus offers 991 TV series and 28,418 full-length TV episodes. The quality of the additional content is Hulu Plus' selling point. Two-thirds of the content only available on Hulu Plus is drawn from prime time shows created on the broadcast TV networks associated with Hulu's owners Walt Disney Co. (ABC), NBC Universal (NBC), and News Corp. (FOX).
As Stewart Schley, One Touch Intelligence senior director for industry intelligence, says:
"The unresolved question is whether these incremental content enhancements are enough to compel Hulu users to begin paying for a companion subscription service."
This chart from One Touch helps explain the breakdown of content:
Hulu Plus' survival really comes down to whether the pay site has the right kinds of content. Already, Hulu offers access to much of Hulu Plus' primetime content if people watch shows when they're new. Hulu Plus provides access to full seasons of shows.
But it's not clear the value proposition is fully developed. If viewers want to pay for full seasons of TV shows, they can go to Netflix for much of the same content. Hulu Plus won't give them a break from some the ads free Hulu viewers deal with.
That combination of factors could mean there's little justification to pony up for a subscription right now.
Also, launching a paid site without a clear content strategy viewers understand could mean that happy Hulu customers who become paid subscribers may be turned off when the shows they want aren't available. Convincing them to return at a later date will be an uphill battle.
Particularly given so much of Hulu's premium content is available elsewhere. Netflix has a lot of those videos with its online streaming service. According to VideoNuze:
"Netflix's sheer size of 15 million subscribers suggests that many Hulu Plus subscribers are also Netflix subscribers. How long will it take for them to realize that much of what's incremental to Hulu Plus over and above Hulu.com also happens to be included in their Netflix subscriptions for free streaming? This overlap could only intensify; Netflix's deep pockets are allowing it to bid aggressively for more and more content as we just witnessed with its Epix deal."
Hulu is in a tough place. NewsCorp wants the site to start making real money. But media companies are particularly protective of their video content right now. Furthermore, many companies are tied into restrictive deals with cable companies that don't want any content going online, even if people pay for it.
Aside from trying to keep terrestrial cable customers as paying subscribers, the cable companies are working on their own digital venture — TV Everywhere — and aren't looking to poach content from there to keep Hulu afloat.
Meanwhile, Apple may be on the verge of renting $0.99 primetime TV shows in the iTunes store. Hulu is fighting a tough battle against many big brands right now - even if some of those companies are nominally its partners.
To survive long term, Hulu Plus must add utility to users' viewing habits, not simply be just another paid TV option.