Hulu may use live TV, lose free ABC and Fox to iTunes
Hulu is considering a major shakeup of its business model that could move away from its free format and towards a paid service with live TV, insiders claimed early Thursday. While it wouldn't drop the current model …
Context & Ripple Effects
On the same day the Wall Street Journal reported Hulu was holding internal discussions about dramatically reshaping itself as digital distribution upends television, Electronista adds two concrete details sourced to insiders: a possible move into live TV, and the possibility that free ABC and Fox episodes would migrate off Hulu and onto iTunes. Both claims are unconfirmed rumors, not announced deals.
What makes the rumor consequential is what Hulu already is: its free service is confirmed as one of the most-watched online video properties in the U.S., and its subscription tier Hulu Plus was slated for TiVo's Premiere DVR as recently as December 2010. A retreat of network-owned content from the free tier would strike at the audience that made the site valuable to its network owners in the first place.
First-order effects
- If the insider talk proves accurate, viewers who watch current ABC and Fox shows free on Hulu would face a choice between paying Hulu for a live-TV-inclusive service and buying episodes through iTunes instead.
- Hulu's own positioning shifts from a free ad-supported destination toward a paid product, while the existing Hulu Plus subscription model continues alongside it rather than being replaced.
Second-order effects
- ABC and Fox, by moving their free episodes to a transactional outlet like iTunes, would be trading reach for per-episode revenue — forcing them to justify whether the advertising value of Hulu's large free audience outweighs direct download sales.
- Any network that keeps free streaming while peers go paid gains a differentiation lever; conversely, if the pull-out happens, remaining free-tier content thins and Hulu must lean harder on its paid tiers to hold the audience.
Third-order effects
- The rumor points toward a structural split in online TV between free ad-supported windows used for promotion and paid channels used for monetization, with network owners increasingly unwilling to give away current-season content at scale.
- If Hulu follows through on live TV, it edges toward competing with the cable bundle itself — a step that would put the network owners' own pay-TV distribution partners in play and raise licensing questions no free archive ever had to answer.
The trend: Broadcast-backed streaming services are drifting from free ad-supported archives toward paid, bundle-like offerings as networks reprice their content.