CTAM Summit 2009: Kilar -- Hulu Not "Giving It Away" for Free

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Hulu CEO Jason Kilar responded to TV industry critics who complain that Hulu is undermining current models saying they haven’t seen his business plan. Talking to B&C after the closing session of Denver, Colorado cable conference CTAM, Kilar said, “We’re very bullish about the future of Hulu, we’re well ahead of plan.”

He wouldn’t comment on whether the site was profitable but added, “I like to say that I’m a capitalist,” adding “We don’t’ do this overnight. “

Hulu recently signed an upfront deal with MediaVest which transferred a couple of million dollars from the media agency’s TV budget to the Website. Hulu is also exploring subscription areas of its service which provides network TV content without charge to consumers.

Last week, Warner Bros. Entertainment chairman and CEO Barry Meyer made a passionate speech at the B&C Onscreen Summit about the dangers of giving top shelf content away for free. Kilar said he had not read the speech but said Hulu was supported by revenue and was doing anything but, “giving it away for free.”

Advertisers buy Hulu on run-of-schedule, meaning they can’t cherry pick favorite shows and must buy whatever comes in a package which might be demographically and gender targeted. Hulu has never revealed its ad revenue. “We’re focused on having a long term business that serves the needs of consumers and advertisers on terms that work for them,” he said.
Defending Hulu against attacks that it is undermining the traditional free to air TV model, Kilar said the site - backed by NBC Universal, News Corp., Disney-ABC and Providence Equity Partners - has gone from 2 content partners to 230 in 19 months and from zero advertisers to 400 over the same period. Kilar said the site welcomed cable partners and suggested there may be a way to work on making cable content available on Hulu through an authentication system.
In the CTAM session, Kilar talked about 50% of content on the site never having been available in the living room in the past year – and therefore not threat to the current TV model –when asked about the nature of that material he described it as past seasons of shows, web exclusives and material such as Dr. Horrible.

When asked whether Hulu would buy another Super Bowl spot he declined to comment but said last year’s ad, which ran on NBC network, had helped boost the company from a service attracting 20 million users to one which leapt to north of 30 soon after the spot ran. Hulu currently attracts about 40 million users. Next year’s Super Bowl is carried by CBS which is not a part owner of Hulu.

In recent weeks, Hulu’s owners have become more vocal in suggesting ways for Hulu to speed up its revenue generation. News Corp.’s chief operating officer, Chase Carey said: “I think a free model is a very difficult way to capture the value of our content…I think what we need to do is deliver that content to consumers in a way where they will appreciate the value. Hulu concurs with that; it needs to evolve to have a meaningful subscription model as part of its business.” Carey indicated some form of subscription might come in 2010.

Separately, NBC Universal TV chief Marc Graboff told reporters last week, "Hulu has got to bolster its economics…I do think Hulu is experimenting with different models," he said. "I know they're looking at any number of things, like adding inventory (more advertising) or creating a subscription model with different windows.”