Commentary

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.

4 comments about "Paying For Hulu? Consumers Might Say Hmm... ".

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Adam Schorr from Self, October 23, 2009 at 3:57 p.m.
..."And if they shrug their shoulders and move on to the next big thing,"...Yeah, Like home movies, and porn. Wow. You get what you pay for in this life. Is it really any more complicated than that? Free, premium content, was for the most part made available based on greed, stealing, and keeping up with the Jones'. For most start-ups, the result has been cash burn until the next round of funding.
Reply

Erin Haskell from Crowley Webb & Associates, October 23, 2009 at 4:52 p.m.

Chris Anderson, author of Free: The Future Of A Radical Price has a lot to say about the free vs paid vs freemium pricing models for online content.

Based on the theories offered in his book, finicky nature of internet users and the trend towards online users to gravitate to free content I doubt Hulu will do well if they move to a paid model.

Erin Haskell
www.crowleywebb.com

Paula Lynn from Who Else Unlimited, October 23, 2009 at 4:58 p.m.

For many people, just between TV and cell phones, that takes another 10-20%+ out of their net income and cannot "write-off" that expense. You are right; something to consider.

Howie Goldfarb from Blue Star Strategic Marketing, October 27, 2009 at 1:37 p.m.

We have a big dilemma. People pay to see movies in the theater. It is about $5/hr or so. On TV we were groomed on Ads supporting content but with no requirement to watch the Ads. If the lack of viewing Ads reduces revenues to where good content can not be produced then they have to charge consumers. The kicker in my opinion is the demise of cable TV. We are all paying for two pipes..cable and internet. We really only need one. And that extra money could be going to content providers. Personally I think all content should be streamed on line for a pay per view charge. This would force content providers/creators to come up with stuff people will pay for. The movie industry is successful so why not TV?