Paying For Hulu? Consumers Might Say Hmm...

• by Wayne Friedman , Staff Writer, October 23, 2009

What if getting consumers to pay for Hulu's premium TV shows doesn't work?

 

The masterminds of TV will tell you content is king -- but I'm betting a few people might believe this: Access is king.

All this comes in the wake of some major TV players talking up the idea of having consumers possibly paying for premium TV programming -- in addition to  online advertising.  In different formulas, NBC Universal, Comcast, Time Warner, and, now News Corp. are floating online pay concepts.

Consumers might look for other ways to entertain themselves.

Maybe the thinking will come down to: We really like your TV shows, but not that much.

Comcast and Time Warner will have no problem with the 80% or so of U.S.TV households who are connected to cable, satellite, of IPTV services of some sort. This will leave the other 20% to grovel.

For NBC Universal and News Corp, partners in Hulu (as well as Walt Disney), it's a different business model concern. Television honchos are already grumbling they are having a hard time making end meet in producing high-quality programming.

Listening to NBC Universal's Marc Graboff or News Corp.'s Chase Carey, you might start thinking that any pay structure would be in addition to what cable operators such as Time Warner and Comcast are doing to make sure their hard-earned customers don't abandon them to get stuff for free.

Comcast and Time Warner don't only make deals for cable network content, but increasingly, network TV content.

Consumers aren't stupid. They'll move to a path of least resistance. 

Consider, there is still 10% unemployment nationwide, and probably 17% if you include those in the under-employment ranks. In a slow-moving economy still in a recession, getting consumers to pay for more stuff will be hard. 

Savings for the first time in years have actually inched up a couple of percentage points. Extra consumer discretionary spending? Not so much.

Listening to NBC Universal president/CEO Jeff Zucker, Hulu is close to profitability. This comes on estimates of Hulu possibly getting to $100 million in advertising sales. But to paraphrase Zucker's it's still about "digital pennies" -- not when the likes of the NBC network pulls in a couple of billion in advertising revenue per year.

If Hulu makes the big jump to pay, observers would say it's a bold, strong move.  Consumers may not bite. And if they shrug their shoulders and move on to the next big thing, NBC, News Corp. and Disney might suddenly long for those digital pennies.