Hulu Plus ends year with 1.5M subscribers
Hulu Plus, the online video subscription service owned by major broadcast networks ABC, Fox and NBC, reached a new milestone at the end of the year, with 1.5 million paying subscribers a little more than a year after its formal launch.
Its CEO, Jason Kilar, also brought in the new year with a comment Hulu's broadcast TV owners might not want to hear: He believes online viewing will ultimately surpass TV as the main way people watch their shows.
"We have conviction that digital ultimately becomes the primary way that consumers across the globe choose to access content," he said in a blog post Thursday.
Hulu Plus lets subscribers stream a range of current shows that have already run on TV, such as "Community," "Grimm" and "The Colbert Report," plus a large catalog of full seasons of back episodes of many other shows for $8 a month. It has begun spending more money on original programming, as well, including a documentary series from filmmaker Morgan Spurlock that debuted in August called "A Day in the Life."
Kilar said in the blog post that Hulu Plus plans to spend about a half-billion dollars on content in 2012.
The episodes on Hulu Plus and its free counterpart, Hulu.com, come with advertising, but less than on regular TV. Hulu Plus can be viewed on smartphones, tablets, computers and game consoles, as well as Internet-connected TVs. Hulu.com can be viewed only using a computer.
Last February, Kilar ruffled feathers at the networks in a similar blog post in which he declared that "traditional TV has too many ads" – an attack on broadcast networks' lifeblood. Advertising brings in many billions of dollars every year.
He argued that Hulu's video ads are twice as effective as those on TV, partly because users can say whether the ad was relevant to them and can choose to watch a different ad. He has argued that has helped viewers, advertisers and content owners alike.
Hulu's revenue grew 60 percent last year to $420 million, Kilar said in the post.
He also said that because of the dual revenue streams from subscriptions and ads, Hulu will eventually be able to pay more per subscriber in licensing fees than other "similarly priced online subscription services," suggesting it will be able to buy more, better content.
The reference was a veiled dig at Netflix, which doesn't run ads. With more than 20 million subscribers, Netflix also charges $8 a month for its online streaming plan. A Netflix spokesman declined to comment.
Spokespeople for The Walt Disney Co.'s ABC and News Corp.'s Fox did not immediately comment. Comcast's NBC owns a minority stake but gave up the right to influence how Hulu is run when it took over NBCUniversal last January.