Hulu Keeping Programmers Happy. How About Consumers?

Hulu screenshot Q1 2011 revenue report

Hulu posted some pretty awesome revenue numbers last night, including projections that the company will make close to half a billion dollars in 2011 and drive 300 million dollars in revenue to its content partners. However, all of that success comes with a price. Like every other over-the-top video provider, Hulu has had to limit its catalog in order to keep content owners happy and stay financially viable. And that makes it hard to maintain loyal viewers. The company says it is on track to exceed one million Hulu Plus subscribers this year, which suggests growing interest in Hulu’s premium platform. But I have to question whether that growth is sustainable over the long term. Once the ability to access television online becomes more commonplace, will Hulu be able to continue wooing consumers and survive  as a stand-alone platform?

Two arguments against Hulu come to mind. First, now that cable companies are taking TV everywhere, Hulu has to contend with an industry that is masterful in paying out cash to its content providers. In a shootout between the two, I’d bet on the cable companies. Second, Netflix has proven, so far, that it’s possible to be a successful streaming company. However, even Netflix faces serious challenges in the future, and it’s hard to imagine that two companies in such a difficult space can survive without strong differentiation. Netflix has a serious leg up on Hulu with more than 20 million paying subscribers to date. Can Hulu really compete with that?

Hulu certainly still has options ahead, including the opportunity to build out an original content strategy and/or offer live television. And it still has Comcast as an investor, albeit one without management control now that the NBCU/Comcast merger has come to fruition. Will that be enough? Only consumer audiences will tell. But I’m less optimistic now than I was six months ago, particularly given how quickly cable companies have pushed their iPad TV apps to market.

7 thoughts on “Hulu Keeping Programmers Happy. How About Consumers?”

  1. Untill Hulu stops restricting their content based upon devices, I will not sign back up. We tried using their service for a couple of months, but found that the content we wanted to view on our Roku was not allowed. Cut the crap Hulu…you’ll gain more subscribers.

  2. I agree with the sentiment, but these are usage and licensing restrictions put in place by the studios they’re trying to appease. Hulu will pay the price, though, as most customers don’t know and don’t care about these details.

    I’m still a subscriber because Hulu actually streams better on my iPhone than Netflix and I’ve enjoyed it at the gym.

  3. “as most customers don’t know and don’t care about these details”

    Good point. Don’t know is irrelevant. Don’t care is apropos. I know, but it doesn’t much matter. Unavailable is unavailable! For me, PlayOn works well, and doesn’t require Hulu Plus. I got in when it was flat rate, I believe they charge monthly now, but still less than Hulu Plus. As an Amazon Prime member and subscriber, I’ve been able to live without NetFlix too – plenty of content out there.

  4. If they have one episode of one show marked as “web only” the service is a fail and thats the reason I have never signed up.

  5. We also use playon to stream to a playstation and roku which means there is no need for HuluPlus. It should be interesting to see how it all plays out.

  6. Bottom line is that everyone I know thinks Hulu sucks, and almost everyone I knows has a Netflix subscription. I’m not sure how they’re making all this money, but we’ll see how it turns out.

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