April 18, 2012
Hulu Reaches 2 Million Paid Subscribers, Boosts Content Spending
After reaching a milestone of 2 million paid subscribers, television streaming service Hulu plans to boost spending to $500 million this year — a 67 percent increase -- to create and acquire additional content, said Chief Executive Jason Kilar on Tuesday.
The added spending underscores Hulu´s plans to expand its business to better compete for advertising dollars with cable networks and broadcasters.
Hulu launched it service four years ago as an online startup, and has grown to roughly 38 million visitors per month.
The company´s business model is based on offering customers free online content, or an unlimited ℠Hulu Plus´ subscription service for $7.99 per month. The enhanced service has grown from 1.5 million to 2 million subscribers this year alone, Kilar said.
The company now expects revenue from Hulu Plus to comprise more than half of its total this year.
Although Hulu does not publicly disclose its full financial results, it has said that revenue was up 60% in 2011, to $420 million, driven by advertisements and subscriptions.
The Wall Street Journal reported that Hulu has plans to launch additional new shows later this week to complement its existing lineup. The company will also begin making a new pitch to advertisers: charging them only for pay-per-click placements when their ads are viewed through completion.
The new approach is consistent with the way in which advertisers allot budgets to traditional TV and online ads.
"It was a big opportunity to push the ad business forward," the Journal quoted Kilar as saying.
Not only do people tolerate the ads, many actually interact with them, Kilar said.
Indeed, for both free and paid viewers, Hulu often displays a pop-up box that asks: "Is this ad relevant to you?"
"It's a high number (of viewers who click)," said Hulu spokesperson Kelsey Oldendorp.
"Because I know that (Hulu employers) really rely on it to target our advertising."
Kilar said additional digital content would become available in the future as the funding for licensing agreements increases.
"There are a couple of barriers, and all are getting knocked down," he said.
Hulu is owned by investors including Walt Disney Co., Comcast Corp., Providence Equity Partners and News Corp.