Technology

Hulu To Spend $500M On Programming In 2012

Matthew Garrahan

13 Jan, 2012

Hulu, the online video site owned by Walt Disney, News Corporation and NBC Universal, plans to spend about $500m on programming this year to bolster its library as cable television operators beef up their own competing online services.

The company's 2012 budget is a $200m increase on the $300m Hulu spent on programming in 2011.

Jason Kilar, Hulu chief executive, wrote in a blog post that the company's dual revenue model of advertising and subscription fees meant it could pay more for content than other online subscription services. "We believe our approach will enable us to secure more valuable content for our users and to secure content in more attractive windows than would otherwise be possible," he wrote.

Hulu generated about $420m in revenues in 2011, an increase of 60 per cent on the previous year, while the company's Hulu Plus subscription service "materially exceeded our plan", Mr Kilar wrote.

Hulu is attracting more than twice the number of new subscribers each day when compared with last year, Mr Kilar added. Hulu Plus now has 1.5m subscribers, which compares with more than 20m subscribers at Netflix, a rival service which offers a subscription DVD service, as well as online video streaming.

Hulu's owners put the site up for sale last year but despite receiving several offers that valued the company at more than $1bn, they decided not to sell. "We were moving too fast to say we did not need to own an asset like this," Jon Miller, chief digital officer at News Corp, told a panel at this week's Consumer Electronics Show.

Hulu's dual revenue model differentiated it from Netflix, he added. "Dual revenue streams work in the media business."

Netflix and Hulu dominate online video viewing in the US but, after years of delay, services launched by cable and satellite operators finally look capable of eating into their lead.

Comcast, the largest cable operator in the US, recently struck a 10-year extension to its carriage agreement with Walt Disney, a deal that gives new online rights for programming from Disney's cable networks, including its ESPN sports network and The Disney Channel. This programming is free to watch for authenticated Comcast subscribers on devices such as the iPad.

HBO Go, the online service launched by Time Warner's HBO channel, has also attracted viewers, with its app downloaded more than 3m times. Showtime, a HBO competitor, has launched its own online streaming service, which is available to authenticated subscribers of the premium cable channel.

HBO last week stopped selling discounted discs of its programming to Netflix, in the latest sign of an intensifying rivalry between the two companies. Netflix will be free to buy the discs of shows such as Boardwalk Empire from retailers.

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