AFI BLOG: Media and Technology

Hulu.com

I guess I shouldn’t have been surprised, but it was refreshing nevertheless to see Hulu CEO Jason Kilar make the case yesterday at the National Assn. of Broadcasters conference in Las Vegas for networks and studios to be more aggressive in making content available online. His admonition: when competing for viewers on the Net, it’s better to play offense than defense. According to Kilar, Hulu is collecting more per commercial on its most popular show, “Arrested Development,” than prime-time TV shows can charge. The higher CPMs reduce the risk that Hulu could hurt the networks’ bottom lines by drawing viewers away from the TV set.

(UPDATE A helpful Hulu PR person called Friday to say that Kilar was using “Arrested Development” just as an example — the higher-than-prime-time CPMs aren’t limited to that show.)

Granted, Hulu runs about a quarter of the commercials that the networks do, so content owners might feel the pain if millions of viewers switched to watching shows on their PCs. But that’s not a realistic concern for two reasons. First, people want to watch television shows on their televisions. A computer is not the first place viewers will go for their favorite programs, it’s where they’ll go if they miss an episode, or hear about something good after it airs. And second, it’s conceivable that Hulu could generate as much per viewer as the networks do. Witness how well CBSSports.com did with the last NCAA basketball tournament. According to the Washington Post (and Silicon Valley Insider, whose numbers are slightly different), the online version of the tournament generated more per viewer than the televised games.

Kilar drove his point home by comparing “Arrested Development,” which Fox canceled during its third season in 2006, to another defunct series, “Felicity,” which ran for four seasons on The WB. The former is making money for Fox through Hulu. The latter, which is easily found online but only in bootlegged versions, is generating zero dollars online for its copyright owners.

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