Will Consumers Pay for Hulu.com Videos?

shows for free but in exchange must also watch commercials since the videos are streamed and not downloaded. Last month, Chase Carey who is the President of News Corporation said that Hulu should start charging fees sometime next year. Presumably he envisions a premium subscription service providing more content or viewing time in exchange for a monthly fee.

There are two reasons to be doubtful about the success of such a plan. First, as author Matt Ragas put it, “We all love the information highway, but we don’t want to pay a toll every five miles.” Second, incumbent media companies may be overvaluing their own content.

Matt’s remark led me to examine my own subscriptions which are summarized in the accompanying table. Already I pay over $220 monthly for telephone, Internet, and video entertainment. Other services under consideration would advance the total to about $265 monthly.  Such an analysis makes me look for ways to cut, instead of add, services.

Phil's Monthly Subscription Fees

Naturally, I’ll focus on the bigger numbers first which come from the cable and wireless providers. However, if The Wall Street Journal (owned by News Corp)   editorial viewpoint prevails, the carriers will likely increase ISP fees even higher. That leaves consumers with thinner wallets to buy additional services from Hulu or anyone else. Even if cable and wireless charges don’t go up, consumers may calculate that they’re already paying enough in service fees.

Readers of the Baltimore Sun seem to be strongly opposed to paying for hulu.com access. A polling button on the newspaper’s website reveals that they voted 20-to-1 against it. You can see the results and review reader comments here.

As for content value, the recent success of Paranormal Activity might serve as a reminder to media producers that we characteristically undervalue the works of people who are not like us. It’s reported that the movie was set in a single San Diego home and produced for $10,000. By the day after Halloween it had grossed over $80 million in box office receipts.

Much like Internet publishing demolished the value of the printing press, low cost video cameras combined with computer-based film editing and an abundance of people seeking stardom and film-crew careers, necessitates an introspective reassessment of Hollywood’s self worth. Paranormal Activity is more than an isolated echo of The Blair Witch Project. Years from now we’ll look back to see it as data point in a connect-the-dots trend line pointing toward a future of content abundance.

To learn more about how your business can exploit or adapt to thye future of media, feel welcome to contact us. You may also want to consider buying our research reports Third Generation Television and Future Developments in Video Advertising.

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