Hulu is launching its new live streaming TV service in beta today, a $40-per-month, over-the-top video package that includes content from all of the major broadcast networks, numerous cable channels and Hulu's own slate of original programming.
The service also comes with limited DVR capabilities (no fast forwarding through ads), and supports two concurrent streams per account. For an extra $15 per month, subscribers can add on an Enhanced Cloud DVR feature with 200 hours of storage and ad-skipping capabilities, or access to unlimited concurrent streams with the Unlimited Screens feature. For $20, users can add both premium features to the baseline bundle.
The big question for Hulu LLC is whether or not it can do with its live TV service that which it hasn't been able to accomplish with its on-demand OTT offerings -- namely, make money.
Most of the company's owners don't break out their Hulu losses in quarterly reports, but they acknowledge that losses have continued. Only Comcast Corp. (Nasdaq: CMCSA, CMCSK) makes a line item note regarding its Hulu investment. In the latest quarter, the cable operator reported a loss of $54 million from Hulu due to "higher programming and marketing costs."
Meanwhile, the $40 price point for Hulu's live service doesn't leave a lot of wiggle room for earning profit, especially given that programming costs aren't getting any cheaper. Perhaps the extra $15 to $20 per month for add-on features will make help push Hulu out of the red, but once the OTT service reaches $55 and $60 per month, it doesn't have much of a price advantage in the market.
Unsurprisingly, Hulu would prefer to focus on how its user experience differentiates itself from other TV services. But while a superior UX is easy to market, it's very hard to deliver. And perhaps more importantly, consumers now have a lot of choices when it comes to OTT services, which means standing out from the crowd gets harder to do every day.
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— Mari Silbey, Senior Editor, Cable/Video, Light Reading