Hulu Plus closing in on 1 million subscribers

TV Arts


by Jason Kilar CEO

We recently closed a big second quarter for Hulu. In the spirit of our
Q1 blog post, we’d like to share results made possible by our recent
innovations combined with a steady focus on our customers (users,
advertisers, and the content community).

- The slope of Hulu Plus’s subscriber ramp is higher than we
previously forecasted. We just closed our biggest month in Hulu Plus
paid subscriber net additions by a healthy margin; we added more
paying subscribers in June than we did in April and May combined. The
below is our month-end Hulu Plus paying subscriber numbers since we
exited our private beta period in November 2010. In our first 7.5
months, we are fast approaching the 1 million paying subscriber
milestone (we already have over a million when including those in a
one-week free trial period). We anticipate exceeding 1 million paying
subscribers before the end of this summer; previously we had
forecasted crossing that threshold around the end of this year. We are
extremely encouraged by the ramp of this business:

- We have always believed that our path towards creating a special
company lay in our ability to delight our customers. The key to
delighting content owners rests in the economics, and Hulu Plus is
already revealing our ability to compensate content owners at the high
end of the market for a given body of content. Today, we proudly and
profitably pay the content community approximately $8 per subscriber
per month for the content offering you see today on Hulu Plus. A
portion of the $8 payment to the content community comes from our
$7.99 subscription fee; the balance comes from the revenue we generate
through advertising. As Hulu Plus increases in scale and scope, we
believe significantly more dollars in aggregate will move to the
content community than has historically been the case in the industry.
These economics are made possible by our ability to thrive on low
margins and the unusually effective Hulu advertising service we’ve
built and will continue to innovate. A very positive trend for the
content community.

- We’ve continued our quest to make Hulu Plus available on every
internet connected device. In the past 90 days, we have made Hulu Plus
available on Xbox 360 and Kinect, select Android smart phones, Tivo
Premiere DVRs, and select Samsung Blu-Ray players. Collectively, this
means an additional 25 million devices are capable of accessing the
Hulu Plus service. Hulu Plus is now accessible on leading consumer
electronic devices and mobile operating systems with a combined
installed base of more than 100 million. Expect that number to grow
aggressively over the balance of 2011.

- The content library on Hulu Plus has also grown considerably. Since
the launch of Hulu Plus in November 2010, the number of total hours of
content on the service has grown 67% from 9,000 to 15,000. The total
number of full episodes on the service has grown 115% from 13,000 to
28,000. The number of TV series on the service has grown 129% from 950
to 2,180, which includes 76 series from Viacom brands like MTV, Comedy
Central, and VH1. The number of clips has grown 85% from 13,500 to
25,000, and the number of movies has grown 222% from 450 to 1,450,
including hundreds of Criterion Collection and Miramax titles. All 15
seasons of South Park, including the current season, were added to
Hulu Plus in June, along with a rotation of episodes appearing on the
free, ad-supported Hulu service. Hulu also exclusively premiered the
U.K. hit Misfits on June 20th, which quickly became one of the most
popular shows on the service. Through an exclusive first run,
multi-year distribution deal, Hulu has introduced Misfits to a U.S
audience of millions.

- In Q2, Hulu remained the leader in U.S. online video advertising
with the largest market share (revenue) of a rapidly growing market.
Hulu serves nearly 2x the number of video advertisements of the next
largest advertising service (Source: comScore). Nielsen IAG measures
the efficacy of Hulu’s video advertising service at nearly 2x that of
linear video advertising services.


It’s been a big Q2. We remain on pace to approach half a billion in
2011 revenue. Thank you for making the above possible. We remain a
team that believes in the value of convictions, thoughtful
stubbornness, and the relentless pursuit of better ways.
So Hulu Plus really does pump commercials even to the paid subscribers.

...obveeus, did you know that people who watch this show are 23 times more 
likely to watch this other show, too?  That is effective...or more effective 
than just slapping up an ad for some other show 9or a dozen other shows).
If you do the math, you'll find that "the balance" in this case is one 
penny. That's probably not very much advertising. :)