Hulu is building a cable competitor that will cost around $40 per month

112263 james franco hulu imageHuluJames Franco in Hulu’s upcoming ‘11.22.63’

Hulu is developing a cable-like online TV package that will be priced “in the ballpark” of $40 per month, sources tell The Wall Street Journal
Hulu’s main value so far has been offering “day-after” episodes of hit TV shows like “Empire” and “Blindspot,” but this new product would allow people to tune into feeds of cable and broadcast TV channels. It would compete with “skinny bundle” cable packages from traditional cable distributors as well as online packages like Sling TV and PlayStation Vue.

Hulu aims to launch the service in the first quarter of 2017, which will also include a “cloud-based” DVR-type function to let people watch recorded shows on demand, sources told the Journal.

Hulu isn’t looking to build 100+ channel cable bundle, but the following channels are definitely expected to be on the service, according to the Journal: “Disney’s ABC, ESPN, and Disney Channel are expected to be available on the service along with the Fox broadcast network, Fox News, FX and Fox’s national and regional sports channels.”

Comcast’s NBCUniversal is another story. Hulu is owned jointly by Disney, 21st Century Fox, and Comcast, but Comcast doesn’t have any say in the management of the company because of the terms of its acquisition of NBCUniversal. And Comcast hasn’t yet agreed to licence its networks, sources told the Journal.

Hulu’s new service would place it more into direct competition with Comcast, a traditional cable distributor.

As Re/code’s Peter Kafka points out, Hulu will likely make the same argument HBO did when it began to sell its HBO Now a la carte service for $15 a month: we aren’t going after the same customers. HBO CEO Richard Plepler has said that he believes there are about 12 million to 15 million “persuadable homes” for HBO Now, and that these don’t overlap with current HBO subscribers, according to Variety. HBO has said that only 1% of HBO Now subscribers previously had HBO.

But that argument might be a hard sell to cable distributors, many of whom are offering their own “skinny bundle” packages of core cable channels, aimed at luring “cord-cutters” back into their ecosystem.

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