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6/4/2009
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Consumers Aren't Ready To Pay For Hulu

Hulu could start charging for some of its online video content, but if the site started demanding money today, many visitors would likely head elsewhere.

Hulu, a popular online video service owned by three major media companies, could start charging for at least some content, but research shows consumers are not ready to pay.

Jonathan Miller, chief executive of digital media at News Corp., a co-owner of Hulu, said in an interview that charging for content was a possibility, but prefaced his comments by saying he was expressing his opinion and was not speaking for the Hulu board.

"In my opinion, the answer could be yes," Miller said Wednesday at an Internet Week event in New York sponsored by The Hollywood Reporter. "I don't see why over time that shouldn't happen."

But if Hulu, which is also owned by NBC Universal, Providence Equity Partners, and Disney, were to start demanding money today, it would likely see many visitors heading elsewhere.

Hulu draws revenue through advertising that appears during shows, much like TV ads. Also charging consumers for content would go against surveys that show most people won't pay for content if they know they can get it for free, according to Gartner. And by "free," consumers mean as part of their paid TV subscription.

In addition, they want the "whole big viewer experience" that can only be achieved on the large-screen TV in the living room, not on a PC, Gartner analyst Amanda Sabia told InformationWeek. Consumers may be willing to pay a small amount for a movie or TV show, but it's going to have to be something they can't get on paid TV through video on demand or regular programming.

"To try to monetize a video site through the consumer is going to be hard," Sabia said.

While acknowledging that Hulu today doesn't have the kind of content most consumers would be willing to pay for, Bobby Tulsiani, analyst for Forrester Research, said the site could introduce some paid content, such as whole series of TV shows no longer on the air, that may appeal to a small number of visitors. In this way, the site could prepare visitors for a paid subscription service in the future.

"I don't think the switch happens overnight, but you could put the building blocks in place," Tulsiani said.


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