Friday, October 22, 2010

What is Hulu Worth?

Finding the right price for a monthly video service is tough because it depends on three things: 1) the range of content available, 2) the availability of substitutes for that content, and 3) how convenient the experience is.

Pricing Hulu at $10 assumes that the value of number one can overcome the issues raised by number two and three. Does it?

Among the Hulu Plus substitutes is Hulu itself, since most of the Hulu Plus content is available on Hulu itself for free.

The additional content a user can get from Hulu Plus arguably does not provide enough additional value, and the ads tend to degrade the "convenience."

Hulu's big draw remains its first-run TV shows. But $10 will buy an awful lot of Netflix movie content, sometime soon.
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