Hulu will spend $500 million on programming


You thought YouTube’s announcement it was spending $100 million for new content channels was big? Well, now online TV service Hulu said it plans to spend $500 million on programs this year after paid subscribers surpassed 1.5 million in 2011.

Revenue last year totaled $420 million, the company said on its website. The company predicted in April that 2011 sales would approach $500 million.

Hulu is signing up twice as many subscribers every day as it was a year earlier, CEO Jason Kilar, said in the statement. As the marketplace is exploding with new viewers and cord-cutters Hulu is competing hard for subscriber eyeballs and advertisers with Netflix, YouTube and Yahoo.

Hulu’s owners, which include Disney’s ABC, News Corp.’s Fox and Comcast’s NBC, called off an auction of the website in October, saying the strategic value of the business outweighed the benefits of a potential sale. In July, the company predicted total subscribers would top 1 million during Q3. More than half of revenue will come from the $7.99-a-month Hulu Plus service later this year, Kilar said.

RBR-TVBR observation: $7.99 per month vs. a bare minimum of $55 per month for cable. The tough economic times are driving much of the business over—you still have to pay the same for internet service—it is inelastic demand today. Not so with cable. Folks can easily cut the cord when they still get to watch what they want and like, and that is the case more and more with new content deals announced daily from Hulu, Netflix and YouTube. Part of the draw, also, is the internet generations are accustomed to seeking out what they want to watch, not having to choose from a massive programming list. There’s an appeal there, it’s simpler for viewers to just enter what they want in a search box.