Hulu Growing Fast, Needs More Content

According to a study by media agency, OMD, 80% of the online population in the U.S. streams video regularly. The study conducted on 1,600 respondents who streamed videos regularly showed that 24% of those studied had cancelled their cable subscriptions. While the study did not specify reasons for cancellation, analysts believe that cable’s services were replaced by online video streaming services such as those of Hulu and Netflix. Another study by Nielsen also showed that over the past three years, the number of unique visitors to online video services has grown 26% and the time spent by them on online streaming has doubled. Online video streaming provider Hulu has also seen strong growth.

Hulu Plus’s Increasing Viewership
Hulu Plus’s membership has been growing at a rapid pace. The paid service now has more than 1.5 million subscribers and, according to CEO Jason Kilar, they crossed that number “faster than any video subscription service launch (online or offline) in U.S. history.” The service is adding twice the number of subscribers daily compared with the previous year.  Their mobile app is helping with membership growth. Hulu Plus is now accessible on more than 200 million mobile devices, including smartphones, game consoles, and tablets. Hulu expects Hulu Plus to account for more than half of their revenues during the current year. Last year, Hulu’s overall revenues grew 60% over the year to $420 million.

Hulu Adds Content
Revenue growth was driven by the increasing membership and content offering. Their content grew 40% over the year and Hulu Plus’s content grew over 105%. Hulu claims that Hulu Plus is the only online video subscription service that has current season content from five of the six largest U.S. broadcast networks.

Hulu plans to continue to add to this content. For the current year, Hulu plans to spend $500 million for content development and licensing for content acquisition. They are planning to launch original shows on their network. Their first original scripted 13-episode series, Battleground, is expected to premiere this month.

According to comScore, when it comes to online movie or TV show content, Netflix attracts more viewers than Hulu. In fact, Netflix surpassed Hulu’s viewership 18 month ago. In November 2011, Netflix had 26.6 million unique visitors, compared with 20.2 million unique visitors for Hulu. Netflix also has a significantly higher paying member base with 24.4 million members worldwide, compared with Hulu Plus’s more than 1.5 million subscribers. Netflix also has more viewership minutes on their site as comScore reported one billion minutes of content viewed on Netflix’s site in November, compared with 480 million minutes viewed on Hulu. Analysts believe that Netflix’s higher viewed minutes are not only driven by users managing their DVD accounts, but also by the fact that Netflix has a bigger movie selection, and movies naturally run longer than TV shows.

For now, Hulu has scrapped plans to sell the company. Instead, they are exploring options to raise additional funding for the expensive content they need. Hulu’s management has remained silent on how they plan to raise funds. Maybe the much-awaited IPO is back in the works.