Beginning what some analysts see as the beginning of a slippery slide away from wholly ad-supported models, Hulu on Tuesday debuted Hulu Plus -- its premium service that will charge consumers $9.99 a month for carte blanche content access over multiple platforms.
When Hulu debuted in mid-2007, it was viewed as a potential threat to cable and satellite providers that charge a premium for content -- and in some cases ad-supported content.
Hulu Plus, which will include some advertising, could therefore be seen as an admission that advertising alone is not enough to support premium content online.
Not so, says senior eMarketer analyst David Hallerman. "It's an expansion of Hulu's business rather than a failure," he says. "What they're offering here is a deep catalog of content, and studies I've seen show that about a quarter of [consumer] respondents are willing to pay for that."
Meanwhile, Hulu is positioning its subscription service as the perfect vehicle for marketers to target advertising across four screens. Initially, Hulu Plus is partnering with Nissan and Bud Light, and said it expects to include additional advertisers shortly.
Hulu says is has been profitable for several quarters, and it is reportedly on pace to generate $200 million in advertising this year. Still, it's unclear whether any of its five owners -- NBC Universal, News Corp., Disney, and Providence Equity Partners -- are presently earning what they consider to be meaningful revenue from the site.
Sweetening the deal for potential subscribers, Hulu Plus will be available over multiple platforms, including Apple's iPhone and iPad, as well as on some television sets via select 2010 Samsung Blu-ray players and Blu-ray Home Theater systems.
Soon, Hulu says Hulu Plus subscribers will be able to access content through the PlayStation3 and Xbox video game consoles.
Hulu Plus subscribers will have access to episodes of more than 45 current series from ABC, Fox and NBC -- from "Modern Family" to "Family Guy," along with full series runs and numerous back seasons of dozens of classics from "The X-Files" to "Miami Vice." In total, the Hulu Plus library aggregates content from more than 100 providers across broadcast networks, major studios and independent content creators.
Still, isn't $120 a year a lot to pay for content, much of which can be consumed to varying degrees online? Not for many consumers, insists eMarketer's Hallerman. "The underlying key to all this is available content," he says.
Late Friday, Hulu said its founding CTO and SVP of audience Eric Feng was leaving the company -- the first key departure for the company.
Three existing Hulu executives will be taking over Feng's responsibilities beginning with Eugene Wei, who is taking on the audience business; Rich Tom, who will be heading technology, and Ting-hao Yang, who will be leading the China tech team.