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You are here: Home / World Wide Web / Hulu Could Reduce Subscription Fee
Hulu May Cut Subscription Fee in Face of Resistance
Hulu May Cut Subscription Fee in Face of Resistance
By Barry Levine / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
The video site has been pioneering the web as the second home for TV shows, and its popularity has allowed it to charge a monthly fee for viewings beyond the ones allowed for free. Now there are reports that Hulu may cut that fee in half in response to price resistance from its users.

Hulu's decision in June to launch a Hulu Plus service with a monthly subscription fee of $9.99 has been closely watched as an indicator of whether a subscription to watch TV shows online is a viable model. According to various news reports, the video site will cut the price to $4.95 as early as this week.

$120 'Feels High'

The site offers free TV shows as well as some movies and other video content served with commercials. The subscription fee offers access to more shows than can be seen for free, as well as the ability to watch content on non-PC devices, such as the iPhone, iPad or game consoles. Free users, for example, can see the last five episodes of The Family Guy, but subscribers can see any show from all nine seasons.

In addition to the price, some observers have noted that rights issues have limited the extent to which subscribers can watch shows. For instance, ABC's popular Modern Family has been on and off the site. It's now back, although only the current season is available to either free or subscribed users.

Hulu has said it "can't offer a specific reason why a particular video may be taken down, as streaming clearances differ from show to show."

Michael McGuire, an analyst with Gartner, said he was "surprised Hulu apparently didn't do more research" about the price point when it launched Hulu Plus. On an annual basis, he said, about $120 "feels high."

'Giant Experiment'

He said there is a level at which a subscription fee for online content is acceptable to a significant number of users, but it depends on the content, usage rules, and the devices on which the content can be viewed. McGuire noted that Gartner did a survey to find price points for online movies, and, in general, $3 a movie was acceptable to most people for a rental and $10 for unlimited viewing.

Michael Gartenberg, a research director at Gartner, added that "Hulu itself is a giant experiment," part of which includes figuring out content and pricing models on an ongoing basis.

Hulu's partners and content providers include News Corp., NBC Universal, and Disney. Last year, a News Corp. spokesperson said Hulu, which was then considering subscriptions, thought a free, ad-based site will have the most resonance with most users.

Hulu has received praise for the range of its programming, the relatively high quality of its online videos, and its innovative approach to online ads, such as allowing a user to choose ad frequency. The site has also grown into a regular viewing portal for many consumers, especially younger ones. It's not uncommon to hear that someone has seen a new show on Hulu, not on TV.

Image credit: iStock/Artist's concept.

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Posted: 2010-10-22 @ 8:59pm PT
now if they stop charging 9$ a month for ps3 users,
that also only get to see the same as free users then we can talk....

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