A new analysis of all the content available on Hulu Plus reveals that over 88% of all the full-length TV program episodes available in the $10/mo subscription service are already freely accessible on Hulu.com. For clips, it's almost 98%. Research firm One Touch Intelligence found that out of 28K+ episodes on Hulu Plus, just 3,345 of them can't also found on Hulu.com. Two-thirds of these incremental program episodes are sourced from Hulu's broadcast TV network partners/owners, ABC, Fox and NBC.
In fairness, Hulu Plus has been live for less than 60 days and will no doubt will be adding more content down the road. But for now the high proportion of free availability diminishes the Hulu Plus value proposition for Hulu.com users considering an upgrade. In addition, the relatively small amount of incremental episodes risks inducing churn, particularly for heavy users most familiar with the service, as they come to realize much of what they've paid to watch is actually available for free. Compounding the problem, Hulu Plus viewers see the same quantity of ads as do free Hulu.com users, so there's no ad-avoidance benefit to subscribing either.
Further, when I analyzed the One Touch data, I found the largest contributors to Hulu Plus's 3,345 incremental episodes are The X-Files (201 episodes), Law & Order SVU (191), Saturday Night Live (190), Late Night with Jimmy Fallon (176) and Family Guy (142). But when I perused Netflix's streaming catalog I discovered that all of the episodes of The X-Files and Family Guy seasons are now available. For SVU, Netflix has the first 10 seasons for streaming, though not the 11th which Hulu Plus has. For SNL, Netflix has only a hodgepodge of seasons but it does have the "Best of" specials for popular comedians, which Hulu Plus doesn't appear to offer. Fallon is the one big Hulu Plus differentiator; Netflix doesn't have any of these episodes.
Netflix's sheer size of 15 million subscribers suggests that many Hulu Plus subscribers are also Netflix subscribers. How long will it take for them to realize that much of what's incremental to Hulu Plus over and above Hulu.com also happens to be included in their Netflix subscriptions for free streaming? This overlap could only intensify; Netflix's deep pockets are allowing it to bid aggressively for more and more content as we just witnessed with its Epix deal.
At least two other content-related challenges loom for Hulu Plus. First are rumored 99-cent broadcast TV rentals from Apple. As I wrote earlier, these could have the effect of cannibalizing lighter Hulu Plus users who mainly use the service to catch up on a handful of current season episodes here and there. Inevitably they'll do the math and realize it would be far cheaper for them to rent a la carte from Apple (and conveniently watch on their TVs via Apple's $99 "iTV" device).
Second is that Hulu Plus will be challenged when trying to get additional cable TV network content. The issue here is that pay-TV providers are in the midst rolling out TV Everywhere services, and are negotiating for rights to stream current and back episodes of cable TV network programs that Hulu Plus is likely gunning for as well. Cable networks are very unlikely to risk irking their big pay-TV partners by offering their prime programs to Hulu Plus.
It's still early in the game for Hulu Plus, so you never know how things will unfold. But Hulu Plus is playing in the same game as industry giants, and appears to be getting squeezed from all sides. If rumors of Hulu going public this fall turn out to be true, it will be called on to address these kinds of issues.
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