Did Hulu Just Make Its First Major Tactical Error?

Hulu has already had quite a ride. In a few short years they have gone from a joke that nearly everyone said was doomed from the start, to become the second largest online video site in the US.

Since they launched, they have kept a steady focus on offering full-length TV episodes – and entire seasons and series in some cases – as well as clips, movie trailers and (limited) full-length movies – all for 100% free to anyone who visits the site. Today, however, Hulu lost some of that focus in an attempt to bring in more revenue with the announcement of Hulu Plus and I’m wondering: is it the right move?

Hulu Plus vs Netflix

First of all, let’s consider what a subscriber gets for $9.99 a month (assuming that when it launches for everyone it is basically the same as today). Basically, you’ll get to watch all of the TV shows that Hulu currently has in 720p HD, plus for most (maybe even all?) shows you’ll be able to watch the entire current season and perhaps the entire series as well on an number of different devices, including the iPad. Ok, that’s nice. Now, let’s compare it to the basic $8.99 plan on Netflix.

For $8.99 (plus taxes for both services) on Netflix, you get to rent one DVD at a time, plus you get Watch Instantly which gives you access to thousands of movies (many of which of course you’ll never waste your time watching) plus quite a few television shows (usually entire or nearly entire seasons and/or series), many of which are available in Netflix’s expanding HD content section (currently over 600 titles). Oh, and the quality of videos on Netflix’s iPad app – simply amazing (though I don’t really like the rest of the app).

So what does this mean? Well, let’s take me for example. I have the $8.99 plan on Netflix and regularly watch Hulu for free (especially from September to May when new/good TV show episodes appear). Over the last couple of years, I basically skip Hulu during the summer. Hulu is convenience, frankly – I could (almost) get all of the new shows I want to see by visiting ABC.com, NBC.com, Fox.com, etc. If I want DVDs though, my only real option is Redbox, and at $1 a day I would almost certainly pay more than $8.99 a month, and I wouldn’t get Watch Instantly.

Benefit of the doubt

So here we all are, trying to save every penny in this economy, and Hulu is telling us that we need to drop $10 a month (or $120 + taxes a year) to get what – get the iPad app and go from 480p to 720p, plus catch up on the more-than-5 episodes we’ve missed? Can that really be worth it?

To make a long story short – at $9.99 for what is currently offered, probably not, but Hulu has been doubted before, and maybe they deserve a chance to prove this is worth it – they’ve certainly earned that at least…

…however…

Another way perhaps?

I still think that there was a better way here for Hulu, especially regarding iOS devices. While I’m happy to see Hulu finally come to the iPhone/iPod Touch and especially the iPad (which is the only Apple product I own) as a from-day-one Hulu watcher, I frankly feel a little cheated that I can’t get the same free service on the iPad.

I understand that Hulu is a supreme balancing act between usage rights, platforms, etc and that they are probably restricted as to what they can bring to iOS devices, but there must have been a way around setting up this pay-wall. There certainly aren’t any technical hurtles to overcome, anymore at least, as well, there is an iOS app in the App Store right now.

Couldn’t they have just charged $9.99 for the app, kept the content free and been done with it? Maybe that wasn’t a big enough prize for them (though I bet they could get 3 million downloads easy at $10 a pop, which would be $30 million for an app that probably cost tens of thousands or at most a few hundred thousand dollars to make, so not too shabby of an ROI). They could then have charged more within the app for instance to watch a full season of a show.

But they didn’t, and now they’ve played their hand and are most likely going to have to stick with for awhile, whether it catches on or not. The future is certainly extremely bright for online streaming video, and in some form, Hulu is most likely going to stay a major player, but this move today could – could – end up being this very unlikely success story’s first major blunder.