Hulu: No, We’re (Probably) Not Gonna Buy It

Hulu

Hulu

Over the past few weeks, upon breaking the news that Hulu may start charging for content, the response among my friends has been almost universally the same – a look of shock or disbelief followed by a dismayed, “but, I love Hulu…”

I know the feeling, like the person I’m dating thinks they might want a break. Crestfallen I think, “this sucks.” Gen Y certainly has a love affair with Hulu. But, introducing a pay-for-content scheme into the mix could make this relationship a little bit tricky.

We love Hulu because it’s simple. An unfortunate side effect of Web 2.0 has been clutter, but amid the static Hulu established a clean, intuitive, easy to use channel. The problems we had with online TV were design, accessibility and attention to detail—and Hulu nailed it. In contrast to other TV websites it successfully translated the act of channel surfing online.

We love Hulu because it gets us. From interface to attitude, the Hulu brand has been on the money. Last year’s Super Bowl spot, “Hulu, an evil plot to destroy the world,” was funny, viral and effective at building an authentic brand image. It’s been so successful that Hulu’s reputation as the place to find TV online has become so well established among my age group. As a result, we’ll likely check it first for any show we’re looking for!

We love Hulu because it makes TV portable. My television can’t leave the living room, my laptop goes into the kitchen when I cook, fits on my nightstand when I go to bed etc. I can take TV anyplace. I can also have it any time. Hulu lets us move, re-watch and share our favorite shows—that’s awesome! and it has become something I expect.

But now Hulu is thinking about our relationship, and wondering if it has been a little too easy. The question has become: how hard will it be to pry a few bucks out of Gen Y’s loyal hands? Potentially very hard.

Not to say that pay-for-content is impossible, but there are a few things we probably won’t stand for and we’re not afraid to leave. By now you should probably have a good idea of how fast we’ll learn bit-torrent and put up with Mandarin subtitles.

We probably won’t pay for commercials. Though notorious for avoiding advertising, us millennials are very aware that they fund our content. We’re fine with advertising on Hulu, we watch it. Start charging us for content and we’ll start to wonder why ads keep interrupting our content. Or maybe we’ll just wait for the whole season on DVD and ‘NetFlix’ it.

We probably won’t change our habits. We expect the ability to watch recently aired shows online for free. FX puts up, “It’s Always Sunny In Philadelphia,” with a one week delay, and that’s great. This has often motivated me to try hard to catch it live. But, if I miss my show and have no way to catch up without paying, I’ll feel slighted. “Screw you if I want to go out on Thursday night, when can I see my show?” The world today demands that we be flexible, and so we demand same of the world.

We probably won’t pay for what we’re getting right now. Though Hulu is often discussed as if it’s a land of untamed free content, any given show typically has just a few resent episodes available. Unless there is more content (and a lot more), it’s unlikely we’ll pay for it. Further, it better be cheap. Don’t forget we’re already paying over $100 a month for basic cable and internet access, (I guess we could just cancel our cable to sign up exclusively for Hulu? But I don’t think that’s what networks want either).

Bottom line, we want real value or convenience. After all, whether it’s student loans or mortgage payments, we’ve all got bills to pay and limited time – what would it take for you to pay for Hulu?

Photo Credit: anuragbansal

Author: Jason Potteiger – Associate Editor at TNGG

Jason Potteiger I’m a Suffolk U. grad with degrees in Political Science and Advertising. I like reading both John and Douglas Adams and spending time in the mountains of New Hampshire (where I grew up). These days I call Boston home, but I have aspirations of one day working in Washington, D.C. and New Delhi, India. Subscribe to Jason's Posts via RSS 

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21 Responses to “Hulu: No, We’re (Probably) Not Gonna Buy It”

  1. Scott

    I would argue the opposite. Compared to a $30/month Cable bill, an internet streaming service can be a very attractive option now, especially with many internet friendly home theater devices on the market. Just as newspapers are closing the floodgates on free content, you can bet networks will continue to tighten restrictions up as well. Will you be willing to wait over a week to view your show online for free? Will you put up with more (annoying) commercials interrupting that show? No, probably not. I recently joined Netflix for this very reason (which by the way, Netflix already has agreements to stream new television), and for ~$10/month I am able to stream a large library of movies and television commercial free. I value content on demand (my schedule), and the ability to forgo the commercials which have little or no value to my viewing experience. There will always be free content available, but if one wishes to get quality content, it will always come with a price tag.

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  2. Allison

    Great article Jason, and I completely agree. When Hulu starts charging, I’m out. The benefit of Hulu has always been that it’s convenient, clean, nice to look at, easy to use, and most importantly, FREE. One big point that you’re missing is that the networks’ websites will still have the shows for free. If I miss the Office, I’m not going to pay Hulu if I can just head over to NBC and watch it for free. Hulu is a one-stop shop, but if I have to go to one website to watch Lost and another station to watch Glee, that’s fine with me. Hulu, it was nice while it lasted and I treasure the time we spent together, but you’ve become too high-maintence and I’m moving on!

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  3. Tara

    If presented with a price-tag, my bit-torrent days would pick up again. I can understand the need for Hulu to charge for their services, but that doesn’t mean that I would want to afford it, let alone have the funds to. As of right now, we have chosen Netflix over internet and cable. I’m learning to be more patient by waiting for new seasons to come out on DVD meanwhile checking movies off from my “Must Watch” list. When we can afford internet again, I’m hoping Hulu will have changed its mind about charging their loyal users…

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  4. Peter

    I see this as the current standard marketing idea. Get people hooked on a free service then tell them that is has become necessary to begin charging for the service. Most of the time they loose the majority of their customers, but if who ever is left provides enough profit to counteract any losses then the company succeeds. In the case of Hulu they would likely make the first step by making it commercial free, at least during the show, but in a few years in will likely become “necessary” to start adding commercials; just like the cable guys did many moons ago. For those not familiar with it, cable was suppose to be fee driven without commercials, that didn’t last long.

    So I say par for the course.

    Though, if Hulu increased their content to that of cable, I would happily pay them for it instead of cable, as I frequently miss shows that I rather enjoy, because I am busy attempting to have a real life and refuse to meet at the alter at their prescribed times. Though I suppose I could get a DVR instead, but then I would have to pay for that too, and I already have the equipment for HULU. So they do have a market out their, we shall see if the market is big enough I suppose.

    Ah I love the smell of Capitalism in the morning.

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  5. Zak Normandin

    First off, I just wanted to say “Great Job” on the article. Your argument is something that I have been thinking about quite a bit these couple weeks. Hopefully we can get a good discussion going on the topic of free/paid media.

    With that being said, I think I’m going to have to disagree with your stance. I think that our generation will pay for HULU. Although we have grown accustomed to getting all of our media for free, the business model simply does not work.

    The problem here started with Napster. When we were all just getting online, Napster was the best thing since sliced bread. We would leave our dialup connection online all night/every night to download 10 or 15 of our favorite songs. This quickly became the mainstream way for our generation to access the music that we wanted. The best part about it was that it cost nothing! It was easy to download the music from your favorite artist and burn it to a CD without ever stepping foot inside a music store.

    Next step was Limewire. Our generation quickly realized that movies could be accessed just as easily as music. With increased bandwith and connection speeds becoming mainstream, it was easy to download the latest movies to your HD and watch them on a computer.

    When the RIAA and Movie studios started cracking down on this kind of stuff, it didn’t go away, but was just re-structured in a legal way through sites like Pandora, YouTube, Myspace (Music), and HULU (Among Others). Each of these companies knew that in order to reach our generation, they would need offer their products for free, and they have managed to do exactly that…until now.

    Because of the huge expense of streaming video online, it is almost impossible to turn a profit using only ad money. Google has been struggling to turn a profit with YouTube for years now (See reference below). Fortunately, because Google is the parent company, they can afford to post a loss and continue to operate.

    HULU, in many ways, is much different than Youtube. They offer good quality, full length shows without all of the junk (I.E. Webcam vids). Our generation loves it, once again, because it’s free! With users demanding higher quality video (I.E. 720p+), the costs are only going to increase for the company which means only one thing…We either pay for the service, or it get’s littered with ad’s like Youtube or Myspace.

    With monthly unique visitors nearing 10m, they would only have to charge a few dollars to cover their costs and make some money. Your telling me that you wouldnt be willing to pay $3-$5/ month for on demand access to high quality streaming video?

    So Gen Y: Belly up to the bar and pay your share. If you can afford $4 Latte’s and Macbook Pro’s, you can definitely afford to pay a couple bucks for media.

    References //
    http://www.crunchbase.com/company/hulu
    http://www.marketingpilgrim.com/2009/04/google-desperately-trying-to-make-youtube-profitable.html

    Reply
  6. James (@jphodgins)

    You make some really good points, but I have two questions about how Hulu’s audience would respond to a different layout. First, if Hulu elminated all ads with a premium subscription, how likely would you be to pay for it? And second, if Hulu added premium content (HBO series or AMC’s ever-popular shows like Mad Men) would you pay for that? For argument’s sake, let’s say Hulu’s subscription is cheaper than the extended cable price. Just curious to see your thoughts.

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  7. Seth Hosko

    I think charging is too easy of a solution for Hulu.. one they know isn’t going to work well. The question of paying for content, particularly content which we’ve gotten free in numerous ways for years, is really, really hard. I don’t have the answer to it, but it’s going to take a lot more creativity. Advertising has always supported TV and other standard content delivery channels in a big way.. the face of advertising may change but I really don’t see that going away. We certainly won’t start paying for content thats ‘free’. Sorry.

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  8. BrittneyWichtendahl

    Hulu’s TV ads were hilarious. I could see them doing some sort of free but pay to upgrade thing a-la Pandora. I personally would not pay for Hulu because I’m not dedicated to enough shows where if I missed them I’d have to run online and watch them. I understand their need to show ads during the shows and that’s fine– it’s a small inconvenience for being able to pull up the newest episode of Family Guy on a lazy Sunday morning.

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  9. Jason Potteiger

    James, those are two great questions–and I think they relate to the post made by Scott.

    I think that a pay for content scheme for Hulu could work, but as I mentioned in my post, they would need to tone down ads or beef up content.

    The larger problem here is that in doing so, we may simply cancel our cable service entirely in favor of a Hulu subscription–and as far as I can guess that’s the opposite of what NBC, FOX and ABC want. They want us on our sofas during prime time, not canceling cable to pay for Hulu. So I think they need to be careful not to bring about what they fear the most.

    Right now I think Hulu compliments TV. The problem is that content existing in two places (online and off) is being framed as a “conflict.” From a consumer point of view, these are two very different channels. Hulu erecting a pay wall will likely just lead to less people watching Hulu, not more people watching TV.

    There are plenty of eyes on Hulu, I think they need to get a little more creative with them.

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  10. Jason Potteiger

    “I understand their need to show ads during the shows and that’s fine– it’s a small inconvenience for being able to pull up the newest episode of Family Guy on a lazy Sunday morning.”

    Brittney, I think you hit on an important point here. If they were to charge for that Family Guy episode, it’s not as if you would go find it on TV (if it was even on), they would simply lose your eyes. I don’t think Hulu and TV overlap as much as it seems. People who don’t watch TV live probably aren’t going to be very receptive to paying just because they have a different viewing schedule, and they’ll likely not change their habits either. Hello bit torrent?

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  11. Jason Potteiger

    Thanks for the kind words Zak, and the thoughtful response!

    “With monthly unique visitors nearing 10m, they would only have to charge a few dollars to cover their costs and make some money. Your telling me that you wouldnt be willing to pay $3-$5/ month for on demand access to high quality streaming video?”

    I actually totally would pay for that. No lie. But the big issue here is that then it’s just another site asking for my money. How successful has WSJ been with that model? (I actually have no idea, I’m guessing the answer is fair to ok–with many quickly clicking away too).

    Right now we don’t mind the ads because Hulu is clean and easy, so it’s worth not trying to go to a place like surfthechannel.com or bothering to bit torrent. I think that while a few bucks isn’t bad, the psychological cost, however, of pulling out our credit cards will be very hard to overcome. If Hulu was another $3 to $5 on my cable bill instead tho? Now we’re talking.

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  12. Jason Potteiger

    “As of right now, we have chosen Netflix over internet and cable.”

    Tara, I think this is “their” worst fear. It’s tempting to try to get more money out of Hulu, but what if it just drives us away even farther? Hulu is worried that they are “training” us not to watch live TV anymore. What if we cancel all our “live” services in favor of things like Netflix or a pay for content Hulu? I’m not sure that’s what they want, but doesn’t seem that far from possible.

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  13. Jason Potteiger

    “I would happily pay them for it instead of cable, as I frequently miss shows that I rather enjoy, because I am busy attempting to have a real life and refuse to meet at the alter at their prescribed times.”

    Peter– I agree, that would be ideal for me too. Canceling cable would be great and if Hulu had all the content I wanted, then I probably would. I’m just not sure that’s what the folks at Hulu are thinking will happen.

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  14. Jen Schmidt

    While i don’t see myself ever paying for Hulu ( because i can easily use torrents), i think it must be noted that there are other media outlets that do have a fee for service system and they function well. Take itunes for example, while it is mostly used as a “stolen” media player, a large part of its function is a place to purchase content as well. All the same media we find on Hulu we can find on itunes, it is just that we are not willing to pay for it. So while this unwillingness to pay does happen, it doesn’t send people running towards realplayer, or windows media. Perhaps Hulu should become a more integrated system. For shows that we pay for, they should be available sooner and have much more limited or non-existent commercials , and if you were willing to wait a week and sit through four 30sec commercials you could have the content for free.

    Reply
  15. The future of advertising? And the answer is… « adnews

    [...] Contradictions abound. Chris Anderson tells us that content and information wants to be free — even though we’re willing to pay billions of dollars for virtual goods  –  right at the time when media margins are shrinking along with client budgets.  Combine that with consumers’ intolerance for advertising and it doesn’t bode well for new models like Hulu. [...]

    Reply
  16. Adam

    Wow. Jason. Great article! You touch on some very insightful points about Gen Y. It is not about the cost of the service, it is about people wanting free access to it. We already pay for our internet service, and most people watching Hulu do so on their laptops. With the gained convenience of portability, people often lose out on screen size unless they hook up their laptop to a larger monitor. It is not about the comparison in price to a cable bill that will stop people from paying for hulu; it is the fact that we don’t feel like we ought to pay for something that we can probably find elsewhere for free on the internet. Hulu provides convenience, which saves time and frustration, but I don’t think that many Gen Y-ers will part with their money for this convenience.

    Reply
  17. Andy from Wisconsin

    Ive dropped my cable service for hulu. They are following along the same suit as Pandora, etc. With the bad economy bla bla bla.. a Newsweek article came out saying that you cant give anything away. I'd love to get paid for commenting .. Wink – Nudge.

    But its probably not going to happen,
    Charge me for Hulu is like prostitution. Ive got a service with bigger cans, Netflix? Piracy? Arrrr

    Reply

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