Hulu bows paid archives

News Corp., NBC, Disney look to bank on libraries

Hulu is diving deeper into the vaults of its content partners to seed its first subscription service offering.

Launch of the Hulu Plus service comes in conjunction with the debut of Hulu’s applications for viewing high-def streaming vid via mobile and wireless devices including Apple’s iPad and iPhone, selected Blu-ray players and home theater systems and Sony’s PlayStation 3.

Hulu’s pitch to consumers is that they can access a broad range of Hulu programming via mobile devices only if they subscribe to Hulu Plus for a $10 monthly fee. The bulk of the shows come from its equity owners, NBC Universal, News Corp. and Disney.

Programming available to Hulu Plus subs includes the entire library of segs for more than 45 contempo shows, such as “Modern Family,” “Grey’s Anatomy,” “Glee,” “Family Guy” and “The Office,” as well as older skeins including “Buffy the Vampire Slayer,” “The X-Files,” “Law & Order: SVU,” “Arrested Development,” “Saturday Night Live,” “Ally McBeal,” “Ugly Betty” and “Miami Vice.”

The older library content will run with embedded ads, with a similar volume to the blurbs included with the free content on the main Hulu platform. Hulu emphasized that Hulu Plus is the first service to offer series in their entirety for on-demand streaming.

Hulu Plus bowed Tuesday in what the company dubbed “preview mode,” in which a limited number of Hulu users will be able to sign up for the service to start in order to allow the company to work out any technical or service-related issues. Hulu CEO Jason Kilar said the goal was to open it up to all users by the time the 2010-11 TV season begins in September.

Hulu has been developing its subscription service for more than a year. There’s been rumblings that the studio partners have been pressuring Kilar to take steps to squeeze more coin out of the full-length programming it offers.

Hulu has been wildly successful with viewers since its March 2008 bow and now ranks second only to YouTube in terms of Internet vid viewing. In May, Hulu served up 1.17 billion vid streams and had 43.5 million unique viewers, who spent an average of 164.1 minutes on the site, according to ComScore. But Hulu has yet to become a big source of profits for its partners. The company has said it exceeded $100 million in revenue last year, and it has already passed the $100 million revenue mark this year.

Kilar told Daily Variety the impetus to move into the subscription arena came from within the Hulu ranks, and it that it has been on the drawing board since News Corp. and NBC U first joined forces in the venture in early 2007. Hulu’s overriding goal is to offer as much TV and movie content as possible to viewers on any device, Kilar said. But to add significantly to Hulu’s already-extensive program slate, the company had to add in subscription revenue as a means of compensating its content owners.

“It was the (Hulu) team that drove a lot of the urgency to launch the service out of a belief that we want to offer more value to consumers,” Kilar told Daily Variety. “The reason people want to subscribe to this is that they value things like the amount of content available, and they want to watch on their mobile devices, their iPads and gaming consoles.”

At present, Hulu typically offers a half-dozen or so of the most recent episodes of programs affiliated with the service. The Hulu Plus menu includes broadcast TV series from Fox, NBC and ABC. The main Hulu site does carry some full-length movies, but Kilar acknowledged that for now, the company’s primary focus is on small screen fare.

CBS has never licensed its content to Hulu, out of concern about how its advertising sales are handled and because the Eye has been using online rights to its programming as a bargaining chip with cable and satellite operators in retransmission consent deals.

Hulu does carry some cable programming on its free site, but cable programmers have been reluctant to offer too much programming for free broadband streaming for fear of undercutting the incentive for viewers to subscribe to cable or satellite TV — the distribs that pay hefty carriage fees for cable channels. Led by Comcast, the cable biz is developing its answer to Hulu with broadband on-demand services that are made available on a password-protected basis to cable subscribers.

Kilar would not specify how many subscribers will be allowed to sign up for Hulu Plus during the preview period, other than to say it will be in the thousands. The company has enlisted Nissan and Bud Light as charter sponsors for shows streaming during the preview phase.

Although some content owners and distribs have been experimenting with upping the ad load in online telecasts — which tend to have a third or less of the ad spots that would run in a traditional TV telecast — Kilar said Hulu would stick with its philosophy that less is more for broadband streaming, for both Hulu and Hulu Plus programs.

“We have a philosophical belief that the best long-term path is to have less advertising than what is found in traditional channels but earn more for the targeting we’re able to provide and the effectiveness that (the lighter ad load) provides,” Kilar said. “We have half the advertising (spots) but we get twice the rates.”

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