Thoughts on Hulu Plus

Hulu062910.bmp Earlier today Hulu formally announced its pay-product, Hulu Plus. You can read about the details here, but we have a few additional thoughts on the matter.

On the advertising: One somewhat surprising aspect of the service is that it will feature advertising at launch. While this was not totally unexpected, it has caught some observers off-guard. Robert Quigley at Geekosystem writes: “Advertisements seem like a major minus for Hulu Plus, especially if they take the form of unavoidable, show-interrupting commercials.” Indeed, as Quigley notes, Netflix offers a very wide selection of television library content, without the annoying ads.

Of course, the dual revenue-stream model that Hulu is promoting is nothing new. Anyone who pays for cable television or satellite radio already pays for access to content that has advertising, so it is logical that media companies would want to take that model online.

However, in order for Hulu Plus to seriously compete with Netflix, something may have to change… and that something could end up being media companies limiting Netflix’s access to library content of TV shows.

On the new platforms: This is a big one. There is now a Hulu app for the Apple iPhone, iPad and iPod Touch devices, and it will soon be available on the Xbox, Playstation 3 videogame consoles, as well as on select Blu-Ray players and TV sets. This has long been a request for Hulu users, as the site (which is based on Adobe’s Flash) is not available for viewing through the mobile browsers.

This is a great move for Hulu, and arguably the strongest reason to buy the service. It gives users a one-stop shop to watch most TV shows in HD, without the need to buy them off iTunes, or download multiple apps. It even works over 3G, so you can watch in the car, though not in HD. And of course connectivity with the Xbox, PS3 and other hardware means that users have another option if they want to cut the cord, and drop their cable subscriptions. Which brings us to…

On cutting the cord: Hulu CEO Jason Kilar told the New York Times that the service will not be a substitute for cable service:

“I don’t believe that at all,” he said. “If you take a look at what Hulu Plus provides, I don’t believe that anyone would see it as, in any way, something that can substitute a pay TV service.”

“It’s full season passes of largely broadcast television shows,” he continued. “It’s a library of older shows. It’s not news. It’s not sports. It’s not cable.”

Kilar is right, but that might not stop some users.

At the end of the day, if you have a favorite show on cable, it will probably not be available on Hulu Plus. Likewise for news and, most importantly, live sports. This author, who happens to be a New York Mets fan, can only watch his team live if he has a cable subscription. There are many consumers out there that want to watch their favorite sports team on that expensive high-definition TV set in their living room. Right now TV is the only way to do that. Services such as MLB.tv offer great products, but do not offer in-market streaming, at least not yet.

Still, the Hulu Plus product, along with Netflix, seems to offer an alternative that is “good enough” to replace cable for some, but not all, users. If you are a big sports fan, or have a number of shows on cable television that you can’t miss, then Hulu Plus probably won’t be good enough for you. If however you aren’t a big sports fan, and are willing to wait until the DVD window for cable shows, then it might be a compelling product.

Update: One other thought: If Hulu Plus really does start to cause wave after wave of consumers to cancel their cable subscriptions, I have to imagine that Hulu’s owners, NBC Universal, News Corp. and Disney would just kill the whole thing.

These big media companies make billions from cable subscription fees and television advertising. The sub fees and advertising on Hulu plus will be a tiny fraction of the larger pie in a best-case scenario. Rather than let them cannibalize themselves, they would be wise to just nip it in the bud and end the service, hopefully driving most of its users back to cable.

And of course, the “TV Everywhere” products are just beginning to be rolled out.

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