More signs Hulu subscription service is coming

On Thursday came more signals from News Corp. that Hulu will charge for at least some of its films and TV shows.

Chase Carey, News Corp.'s deputy chairman, suggested in comments he made at the OnScreen Media Summit that it's just a matter of time before Hulu, the video service founded by News Corp. and NBC Universal, launches a subscription service.

"I think a free model is a very difficult way to capture the value of our content," Carey said, according to a report Broadcasting & Cable, which co-hosted the conference. "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 (the notion) that it needs to evolve to have a meaningful subscription model as part of its business."

Asked when Hulu would roll out its pay model, Carey, who has been to only one News Corp. board meeting since his recent arrival at the company, was less sure. According to Broadcasting & Cable, Carey thought the move would likely be made in 2010. He acknowledged however, that no timeline had been set.

Carey's comments follow similar statements made by other News Corp. decision makers, including Rupert Murdoch, the company's chairman. Murdoch has talked about charging for content at the online units of many of his media properties, including The Wall Street Journal.

If Hulu charges, it's a big deal. The video site, which offers full-length TV shows from NBC Universal, Twentieth Century Fox Film, and other top entertainment companies, is a pioneer. It's the first online ad-supported video service to successfully offer long-form content. If it retreats from the ad-supported model, then what consumers get is the cable business model transplanted on the Web.

And charging for content online may not solve Hulu's revenue problems. Subscription video-on-demand services have to compete with a score of sites that offer pirated content free of charge.

The reason that Hulu is considering a pay wall is presumably because the site isn't generating the kind of money the studios have grown accustomed to. Advertising experts have said that it's not possible to insert enough ads without ruining the viewing experience on one end and on the other, it's not possible right now to obtain the kind of ad rate that will generate big money.

It's interesting to note that while News Corp. appears to be dissatisfied with the ad-supported model, Sony Pictures Entertainment appears to be doubling down on ad-supported Crackle.

There isn't another major studio distributing as many full-length feature films online on an ad-supported basis than Sony Pictures. In February, Crackle began offering catalog film titles from its vast library on Crackle. Recently, "Taxidriver" made its ad-supported Internet debut.

Since Sony Pictures relaunched Crackle--formerly a user-generated video service--in February, the site's premium monthly streams have grown to nearly 10 million, 27 percent of which were in the site's core demographic (men, ages 18 to 34), according to statistics provided by ComScore. Time spent on Crackle has increased sevenfold in that period, to 13.4 minutes per unique session. In the core demographic, that number rises to 16.7 minutes.

Here's another benefit that Crackle offers Sony: the site will post premium films when they aren't under contract to a cable or broadcast TV station. Before Crackle came along, movies like "Taxidriver" would gather dust during the periods when they weren't being aired.

We don't know what kind of money is being made by Hulu or Crackle, but regardless of whether Hulu charges for its content, there is still hope for ad-supported movies and TV shows on the Internet.