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Hulu

1) Hulu's purely ad-supported model faces challenges in securing cable and broadcast content due to concerns about undercutting TV ratings and DVD sales. Cable networks also consider per-subscriber fees from cable operators. 2) Many popular shows are only available online 8 days after airing, and cable operators try to restrict online episodes or remove shows from Hulu. A mixed subscription/ad model could help Hulu gain access to more current premium content. 3) Viewers prefer more/all episodes and fewer ads online. To meet these preferences and address challenges, Hulu should adopt a hybrid model with revenue from ads and a small subscription fee.

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475 views1 page

Hulu

1) Hulu's purely ad-supported model faces challenges in securing cable and broadcast content due to concerns about undercutting TV ratings and DVD sales. Cable networks also consider per-subscriber fees from cable operators. 2) Many popular shows are only available online 8 days after airing, and cable operators try to restrict online episodes or remove shows from Hulu. A mixed subscription/ad model could help Hulu gain access to more current premium content. 3) Viewers prefer more/all episodes and fewer ads online. To meet these preferences and address challenges, Hulu should adopt a hybrid model with revenue from ads and a small subscription fee.

Uploaded by

shishir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Q1. In your view, should Kilar move Hulu away from a pure advertisingsupported model?

If so, what is the preferred new model?


Ans.
Currently, the challenges posed to the pure advertising-supported model
practiced by HULU are:
1. Securing broadcast and cable content remained a big challenge for HULU
since the content owners felt that the online offerings of the shows will
undercut its TV ratings and the DVD sales.
2. Cable networks also considered the per-subscriber fee that they
received from the cable operators before deciding whether the show
should go online.
3. Cable operators were trying to convince the cable networks to restrict
the number of episodes to be made available online or directly remove
the shows from HULU.
4. Many popular shows were not made available online until eight days
after they aired on television.
The cable networks and broadcast networks like TNT, TBS, CBS are all readily
joining the trials for the TV Everywhere initiative to be launched by Comcast
and Time Warner. In this case, the customers who are existing subscribers can
only view the video online so television content providers see this as a better
opportunity to increase their reach and revenues rather than the previous model
for online videos.
Also, as shown in exhibit 5c, the two most important motivators for people to
watch more television shows online are:
a. If more or all episodes and seasons of a show were available. (57%)
b. If there were fewer ads. (47%)
So, to get access to premium content from the cable networks and broadcasters
and to reduce the load of advertisements in its videos, HULU has to move away
from the purely advertisement-supported model.
It has to follow a mixed revenue model that would have two revenue streams:
a. One from advertisements since they have varied advertising formats
and targeting capabilities. Also the online advertising spending in U.S. has
risen significantly from 1997 to 2008.(Exhibit 4a)
b. Second from a small monthly or annual subscription fee from the users
which will create better value for the content owners and this extra
revenue can be used to get access to all the episodes of popular
shows and also reduce the load of advertisements.

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