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CES: Hulu Plus Subs Hit 1.2 Million in 2011

Complete Coverage: CES 2012

In a discussion at CES of News Corp.'s digital strategy and its alliance with Microsoft to make content available on the Xbox platform, Jonathan Miller, chairman and CEO of News Digital Media and chief digital officer of News Corp. noted that subscription growth of the Hulu Plus product has exceeded their expectations, hitting 1.2 million in 2011.

"Hulu Plus we think will have a multiple of that this year," he noted.

During Variety's Entertainment Summit at a CES keynote conversation, Miller also described the growing importance of authenticated access or TV Everywhere deals in their content distribution strategies.

As part of that discussion, he noted that their larger relationships with operators affected both their decision not to sell their stake in Hulu and the way they approached the Microsoft deal announced earlier this week.

With the Xbox deal, Miller noted that they will make content from the Fox broadcast network and Fox News available as part of TV Everywhere deals with operators. Those deals with give subscribers to those operators-none of which have been announced-access the next day to broadcast content streamed to their Xbox Live.

In contrast, the video content from the gaming site IGN and the Wall Street Journal would not be authenticated.

This was designed, he explain to "both support an existing model [with the authenticated deals for Fox and Fox News] and to create new distribution channels" for the other properties.

Miller stressed that the existing relationship with operators like Comcast "is the master of the financial wellbeing of all U.S. based media," hence the growing important of licensing broadcast and cable content through TV Everywhere deals.

"But at same time we have another master, the consumer," he added, "and we have to figure out how to serve both masters in a way that doesn't undermine that business."

The importance of strengthening that business model via digital distribution deals also played a role in the decision by Hulu's owners not to sell the Hulu last summer, Miller noted.

"We had real bids with billions in front of them," for Hulu, Miller said.

But the owners also felt that the market was "evolving very fast" and that there was no need to "rush to the exits" because it was still early days for an asset like Hulu, he said.

Ultimately, the News Corp. decided to retain its stake Hulu "as we moved it to a model that would fit into a more authentic world" where digital content rights would be licensed as part of larger deals with multichannel providers.

"So you now have an authenticated version where you get more programs sooner if you are an authenticated subscriber," he noted. "If not, you have to wait and you may not have the full season," for the free Hulu version.

This also gives Hulu a dual revenue stream of advertising and subscription revenue, he noted.

Miller noted that companies faced a number of difficult issues in their digital distribution strategies.