Announced on the official Hulu blog earlier today, the company has surpassed more than two million Hulu Plus subscribers as of the end of March 2012. At approximately $8 a month for access to the premium level of service, Hulu collects nearly $200 million in subscription fees per year while continuing to serve advertisements to paying subscribers. In an interesting change called the “100% completion rate” rule, company officials have modified when an advertiser actually has to pay Hulu. Applied to both standard Hulu service and Hulu Plus, an advertiser doesn’t have to pay Hulu a dime if a user doesn’t completely finish watching an ad.
Within the blog post, senior VP of advertising Jean-Paul Colaco states “Hulu advertisers will not be charged unless their advertisement has been streamed through completion; in other words, an advertisement that has been 100% delivered. There will be no extra cost to Hulu advertisers for this service.”
However, this strategy isn’t a particularly bold shift in policy as Hulu already requires users to watch advertisements to completion and doesn’t allow users to skip past the advertisements when watching an entire program from start to finish. In addition, Hulu management doesn’t make any specific stipulation in regards to users that mute advertisements through the Hulu interface during the pre-scheduled breaks in programming.
This new policy will help advertisers avoid paying for a partial play of an advertisement when a user exits the browser. For instance, a Hulu user that closes out the browser window or navigates away from Hulu during a commercial break won’t count. This change in company policy also helps advertisers enrolled in the Hulu Ad Swap program. This program allows a user to swap out an ad currently playing for a commercial that’s more relevant. If a user swaps out the ad currently playing within Hulu’s video interface, the advertiser won’t be charged for that partial play.
Over 2011, Hulu’s advertising and subscription revenue increased by approximately 60 percent and the company collected $420 million during the year. Since revenue is continuing to increase, Hulu plans to raise the content budget by 67 percent and invest a total of $500 million in content over 2012.
While Hulu will likely invest in more content previously broadcasted by major networks, the budget for original content will also increase. Hulu recently debuted a faux documentary, political drama called Battleground during mid-February and the show will finish up the 13-episode run during early May. There has been no announcement in regards to a second season as of yet.
Hulu is currently promoting the second season of A Day in the Life, a 22-minute episodic documentary produced by Morgan Spurlock. Each episode takes a look at 24 hours in the life of a famous person and documents that single day in their life. The second season has followed notable people such as comedian Joel McHale, chef Mario Batali and UFC fighter Jason “Mayhem” Miller. According to a New York Times interview, Spurlock had little success pitching the show to cable networks. Most networks wanted Spurlock to bring a lineup of celebrities to the table before negotiating, but management at Hulu was more receptive to the concept during the initial pitch. Later this year, Hulu will debut an unscripted travel series created by Richard Linklater called Up to Speed.
