The TV streaming service Hulu, which recently launched a paid subscription product, Hulu Plus is not averse to the idea of launching an even more expensive ad-free version, CEO Jason Kilar told me on Wednesday in a chat. While it has been critically acclaimed, Hulu Plus has drawn complaints for charging a $9.99 monthly subscription fee yet continuing to show ads (the fee is for expanded selection and greater flexibility).
With the new service, a subscriber is essentially paying twice — once by paying for a subscription and once by watching advertisements in the video. When I asked Kilar to comment on the criticism being leveled at the company, he said that the company was comfortable with the idea of offering a higher-priced version if there is demand from customers.
Kilar argued that in the premium content distribution business there is no one model. Whether it is his competitors or his own offerings, there will many different business model options. He pointed to the old TV business as an example of how different business models exist. There are ad-supported broadcast networks, subscription only operations such as HBO and then there are hybrids like TNT and TBS that charge subscriptions and also air advertising on their channels.
Photo by Rodrigo Sepulveda courtesy of DLD Conference via Flickr
Om, it would appear that Hulu Plus isn’t targeted at the informed consumer of online video services.
Perhaps they intentionally launched with an offering to test the market size of the “uninformed consumer” segment. If the subscriptions are not forthcoming, then they’ll adjust the offer (lower price, or no-ads) in reaction to the market reality.
“With the new service, a subscriber is essentially paying twice — once by paying for a subscription and once by watching advertisements in the video.”
So… it’s exactly the same model as cable subscriptions? The customer pays for the right to watch advertising-laden programming, and premium programming (e.g. HBO) costs even more.