Online video service Hulu has defied many industry watchers’ expectations by managing to juggle the competing interests of its partner companies and continuing to offer selected current and catalog television and movie programming as free, ad-supported content. However, Hulu’s decision to launch a paid subscription service—Hulu Plus—back in mid-2010 was met with skepticism. Would customers really be willing to fork over a monthly fee to watch selected “free” television shows via the Internet?
Although Hulu has tweaked the Hulu Plus revenue model a bit (dropping the price in time for the end-of-year holidays), the company is claiming the subscription service is pretty much a runaway success. In a blog post summarizing results for the first quarter of 2011, Hulu CEO Jason Kilar says Hulu is on track to have over 1 million subscribers by the end of 2010—and, so far as they know, that’ll be the fastest launch of an online video subscription service in history.
Hulu also says that it should be able to come close to $500 million in revenue during 2011—it earned $263 million in 2010—with about $300 million going out to the “content community”—read studios and production companies—during the year. Hulu also says its advertising is up, with 50 percent more advertisers on board during the first quarter of 2011 as there were at the beginning of 2010.
Hulu’s primary competitors in the streaming video business are the likes of Netflix, Apple, Amazon, and Google. The business was formed out of partnership between NBC, Comcast, and News Corp, with Disney buying into the operation in 2009. The recently approved merger between Comcast and NBC saw Comcast forced to surrender decision-making authority in Hulu’s operations, although it can still continue to earn money from content distributed through Hulu and as an investor.