Hulu adds subs, makes money, struggles to find the right buyer

Jim O'NeilRemember Hulu CEO Jason Kilar's prediction that the company's subscription service, Hulu Plus, would top 1 million users by the end of 2011? Well, if you're willing to fudge the numbers, just a little, it's a done deal.

Kilar, in a blog post last week, said Hulu Plus currently has 875,000 paying subscribers and, when you count those on a trial membership, it tops the million user mark. Even if you're a stickler for detail, Kilar said the $7.99 a month service will reach the milestone three months earlier than predicted, certainly by the end of the summer.

While not quite a hockey stick, there is no question that the service finally has started to gain significant traction with the public; Kilar said Hulu Plus added more subscribers in June than it did in April and May combined.

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And, the company's making money, or at least it's paying money to content owners. Kilar said Hulu is "proudly and profitably" paying content owners approximately $8 per subscriber per month, or between $7 million and $8 million depending upon if he's counting trial members as well. The payout comes from a combination of the subscription fee and from advertising revenue, which continues to increase as more advertisers move from traditional broadcast outlets to the online industry.

A similar statement in February drew the wrath of Hulu's owners, News Corp., Disney and Comcast's NBCUniversal. But, with Hulu currently being shopped by the triumvirate, perhaps they're a little more willing to let Hulu's boss paint a rosy picture for possible buyers.

In the second quarter, according to comScore, Hulu recorded the largest market share and served twice the number of video ads as the next largest service. Nielsen said it was the "stickiest" site on the Web, with viewer staying longer to watch more video than anywhere else.

And, it's continuing to add content. Hulu Plus has seen content grow 67 percent since its launch to more than 15,000 hours. There are 28,000 full episodes on the service, a 115 percent increase. Hulu also counts 2,180 TV series, up 129 percent, and it now offers 1,450 movies, a 222 percent increase that includes titles from the Criterion Collection and Miramax. It has all 15 seasons of South Park, including the current season, and it exclusively premiered the U.K. hit Misfits, June 20.

Finally, it's available on about 100 million devices, recently adding Xbox, some Android smartphones, TiVo Premiere DVRs and an array of Samsung Blu-ray players.

I've been skeptical of the service in the past, but I honestly find myself using it all the time. It's too easy not to use, has a good interface and really does have good content. And it's so available.

The biggest question now is, of course, who buys it and what do they do with it?

As a consumer, the $7.99 I pay each month is a great deal. But as a CEO, would I really be ready to drop a couple of billion dollars on it? Sadly, this is one sale that's going to have a tough go of it. In the end, it's Hulu today, gone tomorrow, and that's a shame (and I hope I eat my words).--Jim