Hulu turns a profit, but is it all good news?

Hulu has turned a profit, according to CEO Jason Kilar in a NY Times interview. $100 million in revenue for 2009, in fact, and growing. This is a big milestone for the company that brought streaming TV shows into the mainstream; trying to bridge the gap between the media's financial needs and the consumer's growing dissatisfaction with the advertising model of traditional subscription-based television. 

With the company announcing plans for expansion onto the iPad, one would think that all is well in Hulu-land.  Unfortunately, content providers are complaining about the revenue they are receiving from distribution deals with Hulu, and some providers are backing out altogether. Viacom, one of the biggest content providers, backed out of Hulu citing these complaints, and caused Hulu users to miss out on popular Comedy Central shows like "The Daily Show With Jon Stewart" and "The Colbert Report." 

With these complaints becoming increasingly common, some are pointing to the coming iPad release as a testing ground for a Hulu subscription model. Whereas the company prides itself on offering free content supported by ads, Boxee CEO Avner Ronen thinks that Hulu needs to step out of their box a little.  

"A one-size-fits-all business model is very difficult to pull off. Media companies are much more savvy now about those deals. Everyone realizes now that free ad-supported content is not the exclusive model of the future; it’s just one part of it.”

Kilar, the man who brought the free-with-ads model to mainstream digital distribution, is surpringly easy-going about the idea of a subscription-based service.  

“Our mission is to help people discover the world’s premium content, and we believe that subscriptions can help to unlock some of that, including sports and movies and premium cable shows[.] We’re certainly open to subscriptions as a complement to an ad-supported model.”

Of the many hurdles Hulu has yet to overcome in the digital distribution business, a subscription-based approach combined with an expansion onto the iPad may be just the thing to make both users and providers happy with the service. 

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