Following months of speculation, Hulu has taken the wraps off its paid premium service. For $9.99 a month, Hulu Plus subscribers will be able to watch multiple seasons of programs no longer available on-air, as well as current episodes from Hulu’s media owners including ABC's Modern Family and NBC's 30 Rock.
NBC Universal, News Corp. and Walt Disney Co. are Hulu stakeholders, and this move is a direct challenge to not only their own online services but broadband TV offerings in the works from soon-to-be NBC owner Comcast, which is in the midst of streamlining its TV Everywhere initiative with Time Warner.
As Forrester Research analyst James McQuivey notes to the Wall Street Journal, Hulu Plus "forces the cable industry to realize what is at stake."
The three-year-old Hulu has dominated the free online TV/movie space, sprinting out of the gate with episodes of America’s Got Talent and 30 Rock. But its content partners have not been satisfied with their share of advertising revenue and have pushed for a paid service.
Hulu users are also clamoring for more, with monthly video streams tripling to 1.2 billion in May. According to comScore, Hulu users are a loyal group, watching an average 2.7 hours of video monthly on the site.
Hulu Plus has signed two initial sponsors, Nissan and Bud Light, though its revenues will derive primarily from subscriptions.
What’s on Hulu now will remain on Hulu Plus, including recent episodes of ABC, NBC, and Fox series including Glee, which will remain free. Hulu Plus adds depth and breadth of current and classic shows, in addition to the "Season Ticket" offering of an entire season’s episodes of a series, instead of Hulu's free sampler.
Hulu’s CEO, Jason Kilar, doesn’t see the new paid service as "a substitute" for a cable or satellite TV subscription.
“It’s full-season passes of largely broadcast television shows. It’s a library of older shows. It’s not news. It’s not sports. It’s not cable," Kilar tells the New York Times. "In many ways, it’s like what the smartphone is to the laptop.”
Also boasting HD programming, in an added "plus," Hulu Plus is making its video programming available not only on PCs and Internet-connected TVs but for the first time on the iPhone, iPad and iPod touch, videogame consoles (it's coming to Sony's PlayStation 3 and Microsoft's Xbox 360), and Blu-ray players.
Hulu Plus’ hybrid model is organic to the Internet – free ad-supported content plus additional paid content.
It's also taking aim at YouTube—-which recently introduced subscription wrestling content from WWE, and plans to let users skip ads later this year—and has interesting repercussions for Netflix on Demand and similar sites.