Hulu About To Charge Customers

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Hulu, the premium internet content service, is about to charge customers for access to certain TV shows and movies, perhaps the most important experiment ever to test whether consumers are willing to pay for full-length professionally produced video sent to their PCs. Data from comScore showed that in May, Hulu delivered 1.1 billion streams, second only to YouTube which delivered 14.6 billion. The average number of videos viewed on Hulu by viewers was 22, also second to YouTube which had 101. YouTube videos are often produced by amateurs, so the comparison is not entirely useful.Hulu is also about to sign a deal with Sony (NYSE: SNE) to stream content to the PS3.

“The popular video site is working to finalize agreements with content owners and hoping to wrap them up in the coming days”, according to The Wall Street Journal.  Hulu currently relies on paid advertising to support its business. The new Hulu Plus service will charge customers about $10 a month.

The odds against Hulu are high. It was late into the VOD market. Cable companies and satellite TV services dominate it, and telecom firms such as Verizon (NYSE: VZ) and AT&T (NYSE: T) are aggressively marketing fiber-to-the-home which includes TV service, broadband, and telephone service.

Another enemy to Hulu’s model is the current move by smartphone companies to stream premium content over 3G wireless networks to cellphones. The advent of 4G should make that model even more powerful as will the new better resolution screens.

The greatest threat to Hulu is probably the ongoing “success” of pirated content. File sharing is rarely talked about anymore, but it is damaging video entertainment as badly as music sharing did to the record companies.

Hulu simply has too many fences to clear. The service has little chance of being a success.

Douglas A. McIntyre