Hulu finally announced its “Hulu Plus” premium subscription service, and of course, the early hope from some is that it’ll finally be the service that lets you dump your cable company and go all-web video.
And sure, $10 per month for a bunch of streaming video to your iPad, laptop, Blu-ray player/TV, and game console sounds like a pretty decent deal, especially next to an outrageous $80 per month digital cable bill.
But Hulu Plus — at least in its current state — is no cable replacement, and therefore it’s no real threat to big cable companies like Comcast, Time Warner Cable, and Verizon.
Why not? Three big reasons:
The content selection simply isn’t broad or deep enough to replace cable, unless the ONLY shows you watch are broadcast TV shows already on Hulu. At least in this early version, there won’t be many (if any) cable shows, there won’t be live sports, there won’t be anything from CBS or Viacom, and there certainly won’t be any shows from HBO. So if your TV routine includes “The Daily Show,” the Food Network, “Sportscenter,” or “Entourage,” you’re out of luck. (This is what ultimately led me to scrap my plans for a “Hulu household” and resubscribe to cable.)
Most people still want to watch most of their TV on their TVs. And most people don’t have one of the systems required to hook Hulu Plus on their TV set, and won’t for a long time. It’s great that Hulu Plus will be available on the iPad, iPhone, PS3, Xbox, and connected Blu-ray players and TV sets from Samsung, Sony, and Vizio. But that’s not going to be universal enough to replace the cable box for most people.
The cable (or phone) company still runs the pipe into your house. And Comcast, the biggest cable company, owns a big chunk of Hulu. So if they find that Hulu Plus is getting really, really popular, and messing up their biggest revenue sources — cable affiliate fees — they’ll do something about it. For example, they could get rid of all-you-can-eat home Internet service and start charging for metered service, which would make Hulu Plus much more expensive. Or Comcast could make NBC’s offerings on Hulu Plus weaker, if it got desperate. Or put it under a cable-subscriber-only paywall.
Bottom line: Hulu Plus looks like a great service, and we have no doubt that many people will want to pay for it, especially for iPad and TV access. It’ll be a great complement to cable service, perhaps letting people get rid of their DVRs in some rooms, and definitely making up for cable companies’ crappy on-demand offerings. But it’s not going to replace cable for most people. (With luck, it will get the cable companies to move faster about getting their act together.)
So why is Hulu doing Hulu Plus?
There’s the obvious opportunities to make a little money — significant for Hulu, insignificant for its big-TV owners — and to give consumers a good product that cable companies aren’t giving them.
But as MediaMemo’s Peter Kafka notes, there’s a bigger, inside-the-industry reason, too. If Hulu Plus is even at least somewhat successful, it should give the broadcast networks (Hulu’s owners) even more ammo when trying to get cable companies to pay per-subscriber affiliate fees for broadcast channels the way they do for cable channels.
The pitch would be something along the lines of, “If Hulu can get people to subscribe to this, it makes sense for your subscribers to pay for this, too.” And, “See? We’re not giving away the farm for free on the web!”
Broadcast networks are already getting some of this revenue now — recall Cablevision caving to ABC over retransmission fees this past year — but Hulu Plus bolsters their case for more deals.
And that would be big money for the likes of NBC, Disney, and Fox.
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