updated 01:45 am EST, Thu January 27, 2011
Hulu could move to bundles and toss free video
Hulu is considering a major shakeup of its business model that could move away from its free format and towards a paid service with live TV, insiders claimed early Thursday. While it wouldn't drop the current model, the service is pondering the option of mimicking cable services by offering live TV in package bundles as well as video on demand. The plan would still be under discussion, the WSJ heard.
More telling would be a shift away from free material. ABC and Fox are reportedly looking at pulling some of their free shows and would instead expand the amount of content they have at paid stores, such as iTunes, Netflix and the Zune Marketplace.
The reasons for the possible upheaval weren't specific, but it was likely the result of a mounting conflict over how the service should approach its business model. News Corp. president Chase Carey allegedly prefers the subscription model and helped push for the paid Hulu Plus service to get away from free, ad-supported business; he and backers reportedly objected to even offering the most recent episode for free. Hulu also had trouble when ABC offered an iPad app that gave streaming for free where Hulu Plus would charge money for the same material.
Hulu chief Jason Kilar has also worried that Hulu Plus could lose out to Netflix's model and proposed cutting the price down to as little as $5 per month where media executives, possibly including Casey, resisted the move. The $8 price drop was considered a compromise both to acknowledge the challenge and to keep Kilar from acting on a threat to leave the company.
ABC has considered starting up its own subscription service but might not ever launch it, the insiders added.
The approach if true would at once protect traditional TV by steering users towards paid material but could also serve as a true replacement, offering real live content instead of limiting users to day-after shows as on most Internet sources. Hulu has often deliberately blocked free access to its site from Google TV and other TV-sized hardware but could now have a full TV replacement that would still pay studios.