Hulu 'backs subscription for online video'

US online video service Hulu has suggested that it will soon start charging users to access on-demand content as the free model is not sustainable.

Launched in 2007, the web service is owned by a consortium of media firms, including Disney, NBC and the News Corporation-owned Fox. The platform currently draws revenue from advertising sold around its available video content, including episodes of The Simpsons and House.

However, News Corp's deputy chairman Chase Carey said yesterday at the Broadcasting & Cable OnScreen conference in New York that the advertising-support model for VOD is not viable in the long-term.

"I think a free model is a very difficult way to capture the value of our content," he explained.

"What we need to do is deliver that content to consumers in a way where they will appreciate the value... Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business."

Even though he did not confirm an exact timeline for when Hulu will begin charging for content, Carey said that "it's time to start getting paid for broadcast content online".

Should Hulu forge ahead with these plans, this could have a big knock-on effect for the emerging online video industry in the UK, despite the fact that the website is yet to launch over here.

However, Carey's comments appear to contradict recent trends in online advertising, with media agency Web TV Enterprise this week reporting a quadrupling of demand for online ads over the past year.

In September, a report by the Internet Advertising Bureau and PricewaterhouseCoopers revealed that online ad spend has now surpassed TV for first time ever in the UK.

Internet-based advertising increased by 4.6% during the first half of 2009 to reach £1.752bn, compared to expenditure on TV advertising stagnating at £1.6bn, down from £1.9bn year-on-year.

Last week, Channel 4 signed a new deal to bring its 4OD on-demand service to the Google-owned website YouTube, with revenue to be drawn from advertising deals.