Hulu CEO Jason Kilar Wednesday night took the gloves off, in a blog post criticizing the business model of traditional television companies like Hulu owners News Corp., NBC Universal and Disney. In the post, titled "The future of TV," Kilar said "traditional TV has too many ads," noting that "users have demonstrated that they will go to great lengths to avoid the advertising load" of traditional TV.
Kilar also said that, aside from sports, viewers increasingly are turning to on-demand viewing to avoid commercials, and said "based on metrics from Nielsen/IAG, Hulu's video advertising service is roughly 2x as effective as traditional TV video advertising services."
A Disney spokesperson said Kilar's views were "personal and clearly not shared by anyone at Disney," according to a The Financial Times report that cited other anonymous sources saying Hulu's owners were livid over Kilar's post.
The post laid out what Kilar said he though were the problems with current TV models.
"Consumers want TV to be more convenient for them," he said. "People want programs to start at a time that is convenient for their schedules, not at a time dictated to them. Consumption of original TV episodes will eventually mirror theatrical movie attendance: big opening Friday nights, but more consumption will be in the days and weeks afterward. Consumers also want the freedom to be able to watch TV on whatever screen is most convenient for them, be it a smartphone, a tablet, a PC, or, yes, a TV."
And, he said advertisers are betting on a different TV experience as well.
"For over 60 years, video advertising could only be bought via a TV show's projected audience, which served as a blunt proxy for a certain target audience," Kilar said. "The result has been many wasted impressions and an often irrelevant experience for consumers.
"In the near to mid term, we anticipate being able to generate higher advertising returns than any traditional channel can from their advertising service, for any type of content," he said. "We've invented patentable technology that has enabled us to deliver much more relevant video advertising and to do so in a manner that generates much higher recall and purchase intent than other video advertising services."
Hulu expects to approach $500 million in advertising sales this year, he said. The company saw ad revenues of some $108 million in 2009 and $263 million in 2010. And, Hulu Plus, the $7.99-a-month premium service Hulu introduced last year, is expected to pass 1 million subscribers this year, and have a revenue run rate in excess of $200 million this year.
Kilar also said content owners would drive the change as well, licensing their best content to distributors who offer the best "per-user per-month basis."
Hulu, he said, anticipates in the near term "being able to generate higher advertising returns than any traditional channel can from their advertising service, for any type of content."
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