The video-streaming service Hulu reported that revenue rose 60 percent last year and said its subscriber base now numbers 1.5 million.
Impressive, right? Hold on just a second.
As Hulu CEO Jason Kilar put it in a post on Hulu's blog:
We grew the business 60 percent from 2010 to approximately $420 million in revenue. We exceeded our plan despite the soft advertising market (economy) in the second half of 2011.... Hulu Plus now has more than 1.5 million paying subscribers.But let's put that into context. Hulu Plus is a subscription service that charges $7.99 a month, and so, these days, is Netflix. In a 2008 interview with the Unofficial Stanford Blog, former Netflix CFO Barry McCarthy said the company took five years to reach $500 million in sales:
In 1998, I think the business did $1 million in revenue. In 1999, we did $5 million, then $35 million and then $75 million and $150 million and then almost $300 million.... We were I think five years to $500 million and another three years to a $1 billion, all because of the subscription model.At first glance, Hulu's revenue growth is much more impressive. Of course, Hulu had a couple of advantages that Netflix didn't. Netflix was unheard of when it launched with a brand new business model. Hulu, by contrast, began as an ad-supported service formed by News Corp. and NBC Universal, and its service launched to fanfare and came loaded with popular TV shows.
Still, Hulu Plus appears to be generating some significant revenues. What we don't know is how much profit the service generates.
Now for that increase in subscribers. Hulu Plus finished 2011 with just a little under 1.5 million paid subscribers, about 1.1 million more than it started the year with. Adding one million new customers in a year isn't bad--but Netflix was adding a million subscribers each quarter prior to raising prices last summer, which led to an exodus of users.
Netflix says it expects subscriber growth to resume early this year.
One could reasonably argue that Hulu should have been attracting a large chunk of of those Netflix refugees and adding more than the 300,000 or 400,000 subscribers it gained in the second half.
One reason that Hulu Plus may not being faring better is due to the service's struggle to stand out against Netflix and Amazon's movie offering.
Hulu Plus is known for its stockpile of TV content but Netflix has quickly been adding to its library of TV shows and in addition, Netflix, which has more than 24 million subscribers, typically offers far more feature films.