When Hulu launched, its business model was to generate revenue exclusively through advertising. With its introduction of premium subscription service Hulu Plus , the company created a revenue stream that CEO Jason Kilar now says will account for the majority of revenue in 2012.
But can Hulu scale a business off subscriptions? All Things D's Peter Kafka asked the executive on stage this morning at All Things D's media conference.
"Absolutely," Mr. Kilar responded.
Can that business be profitable?
"Absolutely," he said again.
In fact, Mr. Kilar said, Hulu Plus has allowed Hulu to pay more fees per user, per month to content partners -- which include TV networks and movie studios -- than any of its competitors, including Netflix.
Mr. Kafka also asked Mr. Kilar whether his vision for Hulu differed from its big-media stakeholders'. Mr. Kilar didn't answer directly but acknowledged that navigating the complex corporate arrangement has been a "bumpy ride." Hulu is jointly owned by Providence Equity Partners, NBC, ABC and Fox, which supply its most-watched free content.
"When the television was first introduced, the movie industry viewed it as the devil incarnate," Mr. Kilar said. But TV ended up being "the best thing to happen" to Hollywood, he added.
"The internet is no different," Mr. Kilar said. "It probably will serve as one of the biggest blessings to the content industry."
Mr. Kilar was also asked how far Hulu would move into original programming, after its recent announcements of series such as Battleground and a blog post in which he wrote that the company would spend $500 million on content this year. He indicated that some differentiation through exclusive original content was important but not necessarily critical. The vast majority of the $500 million that Hulu will spend on content this year will be go to pay licensing fees to TV networks and other partners, not toward original content investments, he said.