Hulu Ditches 'Free' Model Without Giving It A Chance To Succeed

from the the-illusion-of-disruption dept

For years we’ve noted how as a product of the cable and broadcast industry, Hulu has often gone out of its way to avoid being truly disruptive. Owners 21st Century Fox, Disney and Comcast/NBC have worked hard to ensure the service is never too interesting — lest it cannibalize the company’s legacy cable TV cash cow. So Hulu has been doomed to walk the halls of almost but not quite compelling purgatory, a rotating crop of execs for years trying to skirt the line between giving consumers what they actually want — and being a glorified ad for traditional cable television.

Fast forward to this week, when Hulu announced that the company is backing away from free as a core component of its business model. While Hulu began as a free option, it has slowly but surely been making free content harder to come by. Instead, users now have the option of paying either $8 per month for a streaming service with ads, or a $12 per month service (mostly) free of advertising. As such, the company proclaims that offering anything for free is no longer part of the company’s vision of the ideal “Hulu experience”:

“For the past couple years, we?ve been focused on building a subscription service that provides the deepest, most personalized content experience possible to our viewers,? Hulu senior VP and head of experience Ben Smith said in a statement. ?As we have continued to enhance that offering with new originals, exclusive acquisitions, and movies, the free service became very limited and no longer aligned with the Hulu experience or content strategy.”

Instead, Hulu intends to focus on its subscription services, and the launch of a live TV subscription platform sometime in early 2017. It will offer some free content 8 days after a program’s air date, but only via a new Yahoo/Verizon web portal that may or may not even exist next year at this time. Thanks to intentional release delays, a shrinking catalog of free options and other restrictions you’ll note Hulu can’t specifically claim that the free business model failed, because it was never truly given a chance to succeed.

And because this is the cable and broadcast industry, Hulu’s “content strategy” will remain hamstrung by all manner of unnecessary restrictions. Time Warner, which recently paid $583 million for a 10% stake, has been pushing to pull all current seasons of shows from the service. It’s also worth remembering that the 2011 NBC Universal merger conditions blocked Comcast from meddling in Hulu management (not that this always stopped Comcast) to prevent anti-competitive shenanigans. But those restrictions will sunset in early 2018, at which point ownership pressure to ensure Hulu isn’t too disruptive will only grow.

So on one side, you have Hulu claiming it wants to become disruptive and profitable. On the other side, you have its owners intentionally doing things to ensure it never becomes too disruptive and profitable. And offering free services as part of your business model certainly doesn’t line up with the goal of keeping the legacy cable industry cash cow happily mooing for another decade. As we’ve long noted, most cable and broadcast companies think this whole cord cutting thing is a fad that ends when Millennials start procreating. As such the focus is on the illusion of innovation while they wait for the storm to pass.

While ditching free may not be a great idea, the real threat to the viability of a streaming revolution remains exclusive licensing and fractured content availability. As broadcasters increasingly focus on their own streaming services, exclusive arrangements (like CBS with Star Trek) are flourishing. In Hulu’s case, it means losing access to the CW network, now exclusive to Netflix. It also means losing access to the Criterion Collection of films, now the streaming exclusive of a new Turner-owned streaming platform called Filmstruck. This fractured availability only frustrates and confuses customers, many of which will simply return to piracy.

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Companies: hulu

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Comments on “Hulu Ditches 'Free' Model Without Giving It A Chance To Succeed”

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James Burkhardt (profile) says:

I was paying $12 a month for access to CW shows. The DCTU was worth it to me. Im off subscription because it is summer, and so the only thing I was watching was The Daily Show which I could get free. But its not enough to get me to resubscribe, and if they lost CW, i’m gone. but I dont like netflix exclusivity, because it means waiting until fall 2017 at the earliest before seeing any of the upcoming seasons. Hulu and Netflix had for me different purposes, and both got my money. To see them trying to compete against each other when they aren’t in the same market is infuriating.

Uriel-238 (profile) says:

Re: Re: "90% of everything is crud"

One of the benefits of media piracy (for me) has been the necessity of preloading content, which has forced me to be more selective of the content available, which has encouraged me to actually look at what I’m about to view / read / listen to / play.

As Sturgeon observed (in response to someone else saying 90% of sci-fi is crud) 90% of everything is crud, and our content creators (professional or otherwise) are only guessing at what makes something good, or not.

The habits developed by media piracy actually lead to a better chance of picking out the non-crud from the crud, or at least some introspection as to why a given non-crud appeals.

Anonymous Coward says:

I have Netflix, $12 Hulu, and Amazon Prime and between them there is enough stuff to watch. Never ever buying cable/sat again, and haven’t had it since 2006. And I could careless about specific shows, they want to pull something, then I won’t watch it. Either way not buying back into TV sub.

There is plenty of other entertainment options these days than TV shows

Anonymous Coward says:

Screw Hulu!!!

Hulu offered subscription for streaming without commercials. Yay!!! I signed up, gave them my money.

Watching video… this one has ads just because… WTF!!!
Well shit! I cancelled my subscription!

Fuck you Hulu, you lying sons of bitches! Fuck you FTC for letting companies repeated lie to consumers in their marketing campaigns without punishment!

Anonymous Coward says:

Re: Screw Hulu!!!

Hulu killed me from being a subscriber because of adds a couple years ago. I especially hated when an add didn’t load correctly and required you to refresh the browser. Then not only did you have to watch the add over, you had to skip ahead in the movie to catch back up and get caught with another add. I would probably pay up to $15 a month for the content if it was completely ad free.

JBDragon (profile) says:

Re: Re: Screw Hulu!!!

HULU is unwatchable with Commercials. So the $8 option is out the Window. It’s almost not worth watching FREE.

A Antenna and a TIVO, I can record all the broadcast channels and skip past all the commercials. Add in Netflix and I already have to much to watch. Add in MeTV, and AntennaTV and other channels on the antenna, and you get a lot of great classic TV. If you haven’t watched it, it’s NEW to you!!!

There really isn’t much need for HULU. Signing up for all these services like Netflix, HULU, SlingTV, AmazonPrime, how are you saving money. How the hell do you have that much time to watch all that TV?

A couple shows like “The Walking Dead” on AMC I’d get a season pass on Amazon. Then I can watch the show on Monday after it aired Sunday on AMC, but I’d own it and it would be Commercial free. I get the SD version which looks just fine. With all the savings, it’s a drop in the bucket.

Anonymous Coward says:

Re: Screw Hulu!!!

Due to streaming rights, the following shows are not included in our No Commercials plan and will play interruption-free with a short commercial before and after each episode: Grey’s Anatomy, Once Upon A Time, Marvel’s Agents of S.H.I.E.L.D., Scandal, New Girl, Grimm, and How To Get Away With Murder.

That One Guy (profile) says:

Re: 'Mission accomplished'

If the point is to have an example of why such services ‘just don’t work’ then having Hulu crash and burn would be fully in the interest of the companies that own it.

“We’re not withholding our content from Service X because it directly competes with our offerings, we’re doing it because such services are unsustainable and aren’t viable alternatives to traditional offerings, and as such it would be a waste of time and money to do so. It would also potentially cost our customers if they signed up for a service only to have to go under a year or so later.”

Anonymous Coward says:

Hulu used to be nice, until they broke get_flash_videos

Their flash player was always garbage for me, but get_flash_videos was great for watching their programs on a full home entertainment system. Unfortunately, they kept screwing with their stream setup and, about two years ago, broke things so badly that the people working on get_flash_videos/Hulu integration stopped posting fixes. From what I’ve read, I’m pretty sure it was an intentional break by Hulu because they didn’t like anyone being able to use anything other than their garbage player, so they kept breaking other options on purpose. That kind of behavior is absolutely unacceptable to me, so I abandoned them. They lost my business and are not getting it back.

Anonymous Coward says:

Re: Re: Hulu used to be nice, until they broke get_flash_videos

I considered that they might have negotiated a license that requires them to be obnoxious, but that does not excuse them from being obnoxious. If they want to enter into contracts that require them to frustrate their customers, that is their choice. As a prospective customer, I refuse to do business with companies that actively and intentionally frustrate their customers, whether because of contractual obligations or just plain stupid employees.

ECA (profile) says:

PArt of HULU since the start..

This is as bad as Netflix..
It WAS Good, then BAD, then Good, then WORSE…
They got rid of FORUMS, a few years back..They got tired of the complaints..

But WHO is behind HULU??
HOW many Corps have contracts and restrictions, and BS over content..And they CHANGE every time we turn around..

If HULU is independent, they could of Done better..and KICKED the CORPS OUT, until they figured out the NEW SYSTEM..
IF they are PART of the CORP system, they are idiots..

DB (profile) says:

This looks like a “backburn”.

A strategy for fighting a large fire is to light a small fire to create a burnt-out zone. With no fuel to expand, the fire is contained.

Hulu looks as if it was created to suck the life out of nascent competitors, and to “prove” to VCs that no similar model could be profitable.

Except that Netflix, YouTube and other flanked that line and are filling in behind with original programming. And, in YouTube’s case, clips that have the key content.

Anonymous Coward says:

Hulu was shit from the very beginning. We cut the cord 8 years ago and I tried Hulu Plus at first, but it was a waste of money. Between the release delays and the incomplete shows, it wasn’t worth the $8 then. My wife used the free Hulu to watch her soap for awhile, but then it became to “gay” orientated and it was always out of sync for her and then we never went back. Never even think about it until something like this pops up.

JBDragon (profile) says:

Re: Re:

I tried a couple of their free 30 days trials. I tried to watch 1 hour long show. I think it was “The Fall Guy”. There was like 4 commercial breaks every 10 minutes. It was 4 of the same 2 broke girls commercials, over and over and over and over again. You have to sit there and take it. There’s no Fast forwarding or channel surfing. I couldn’t take it after about 30 minutes or so, I had enough, and didn’t watch anything else in that month.

If you’re going to have the service, you have to just pay the $13 for the so called commercial free version!!! Net as always Netflix is cheaper and there’s not a single commercial anywhere. Their Original content is far better. I have my Antenna and a Tivo for the Broadcast channels. I record everything before I watch so that I can skip commercials!!! Hulu? No thanks!!! A service owned buy the same old content providers. What did people think was going to happen? It’s always sucked, it’s just worse now.

Rekrul says:

Am I missing something here? At least six months ago I went to Hulu to check on something and was greeted with a screen asking if I wanted to subscribe or start a trial. There was no “free” option. I wasn’t able to watch anything without signing up and (presumably) giving them a credit card number.

Regardless, they only had one thing I was interested in; The uncut episodes of the 1995 Outer Limits. The idiots at the Canadian company who released the DVD sets of seasons 2-7 used the censored syndication versions. Hulu had the Showtime copies. Unfortunately I was never able to find a way to download them.

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