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Report: Hulu’s Rumored Subscription Service Faces Challenges

9 Jun, 2010 By: Erik Gruenwedel

Hulu’s effort to roll out a monthly subscription service faces numerous obstacles largely due to a user-base predicated on accessing free content, according to a new study.

The website for re-purposed television programming — co-owned by The Walt Disney Co., NBC Universal and News Corp.  — reportedly will bow a $9.95 monthly subscription plan for catalog content.

According to the study, conducted by Santa Monica, Calif.-based research firm Interpret, Hulu and Netflix streamers have decidedly different interests — the former more apt to stream TV content, and the latter more likely to stream movie content (among Hulu-only streamers, 93% watch TV shows and 60% watch movies, compared with 68% and 87%, respectively, for Netflix-only streamers).

“The lead Hulu has established in streaming television is a blessing and a curse,” said Josh Bell, executive director of Interpret. “Hulu’s audience is conditioned to expect breadth of quality TV programming for free with limited commercial interruption, but reliance on network television programming puts them in a precarious position.”

Hulu, for the record, has not commented on the issue. Since its launch, the site has become a Web sensation with more than 40 million viewers in March watching 1.1 billion videos (2.6 hours per viewer), according to comScore.

The report, based on a survey of 9,000 consumers, found online TV streaming is primarily done to catch up on missed current episodes and that Hulu viewers are also more likely to visit ad-supported network sites to find missed episodes.

It said Hulu’s best chance at a subscription model hinges on diversifying its content to include newer movies, sports programming and premium cable networks, all of which consumers are accustomed to paying for.

“Ad supported models will still work for certain stuff, but not for premium content,” said Edward Woo, media analyst with Wedbush Morgan Securities in Los Angeles. “Viewers may be hesitant when they have to pay for what was free. $10 might be too high for just TV shows.”

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