Hulu CEO Rethinks the Concept of Ads on Paid Subscriptions

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What do Netflix and Amazon Prime have in common? Besides being two of the most popular movie and TV streaming services, they don’t put ads on their shows.

Hulu looks a lot like Netflix. They have loads of new and classic TV shows and movies that you can stream right now, on your computer, your tablet or phone. But with Hulu, you get commercials. Lots and lots and lots of commercials. Three 30-second spots per half hour – which doesn’t sound so bad when you read it but it’s bad when you’ve watched the same ad three times in forty minutes.

But hey, it’s free so they have to pay for the shows somehow, right?

Not really, because Hulu Plus, the paid subscription side of the service, has ads, too. Maybe, just maybe, that’s why the service isn’t doing so well. I know it’s the reason I canceled my subscription.

After two failed attempts to sell the business, Hulu’s CEO Andy Forssell is rethinking the plan. He told investors that he intends to scale back the number of ads in the video streams. He’s also considering a higher level account that eliminates ads altogether. It works for Netflix, but Hulu doesn’t have a large customer base – so subscriptions alone won’t pay the bills. Not right now but that’s okay because Disney, 21st Century Fox and NBCUniversal, co-owners of the site, recently invested $750 million in the biz.

Said Forssell,

“What the $750 million lets us do is press down the accelerator and grow (the subscription business) faster, both through content and marketing. We want to get it to scale.”

Hulu has a younger, richer audience than broadcast TV. You can see who their demo is just by hitting the front page of the site. New shows from Fox, Saturday Night Live, Family Guy. They run a large number of shows from around the world and they have a whole channel devoted to video game news and trailers. Hulu should work. It’s a whole different vibe from Netflix and Amazon Instant. It’s more like YouTube with production value – and it’s backed by three of the biggest entertainment powerhouses.

Hulu should be making money and tons of it – maybe, instead of getting brands to buy ads, they should get them to sponsor content. That’s how you satisfy both the accountants and the consumers.

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via Business Feeds

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