Published July 31, 2012
Good news for Hulu Plus fans who also happen to have an Apple TV in their homes: The subscription VOD service is now available as an app on the streaming device. But wait — why is Hulu Plus coming to Apple TV now, years after it first began rolling out on other connected devices? Well, there are a few likely reasons.
For one, the new Hulu Plus app lets users sign up for the service using Apple’s own in-app purchasing and subscription renewal. Hulu follows Netflix, which also recently added subscription directly through the streaming box. Previously, both had eschewed such purchasing options, in part because, as payment processor Apple TV took a cut of the $7.99 subscription. But also because, with users signing up directly through Apple TV (or any Apple device, really), Apple owns the customer and billing information, something that those companies don’t want to lose control over.
But as Apple TV’s device footprint grows, and as rumors around the launch of an actual TV continue to persist, it’s become increasingly important for content owners to target the device. And so, as one of the few major paid services to not yet be on Apple TV, Hulu saw an important new distribution outlet that it had to reach.
One other big attraction to the platform is the availability of a viable ad platform. In case you didn’t notice, very few Apple TV apps have ads — for the most part, they’re either subscription-based services (Netflix, MLB.tv) or free to watch (YouTube, Vimeo). One of the big sticking points I’ve heard about Hulu and Apple TV over the years is that Hulu needed the ability to serve ads into the platform before it joined — after all, ads are its bread and butter. Hulu Plus isn’t the first app to have ads — WSJ Live, which was added to the device late last year, also has ads — but ensuring that the ad-serving platform was mature enough was likely a big part of why Hulu Plus was held back for so long.
As Peter Kafka points out, the latest version of Apple’s operating system, Mac OSX Mountain Lion, includes a neat little feature called AirPlay Mirroring. That basically lets anyone with a new-ish Mac and an Apple TV to use their TV as a display, without needing to hook up HDMI cables or any other cords from their laptop to the TV. Being able to wirelessly stream any video on the Internet directly to the TV posed a threat to the whole Hulu Plus subscription model, which is based on people paying for access on various devices. With a choice between making revenue from Apple TV users or not making revenue from Apple TV users, guess which Hulu chose?
But what about Apple? Doesn’t Hulu Plus compete directly with its own video-on-demand platform? Well, yes and no. Apple TV users are unlikely to purchase a TV show from iTunes when they can pay $7.99 a month for all-you-can-eat shows from Hulu Plus. Even so, media purchases still make up a very small portion of Apple’s business. Apple makes all its actual money from sales of hardware, so having more content on that hardware could help ship more units which means more money for Apple. More importantly, though — take a look at the top shows being sold through Apple TV. They’re all from cable networks like AMC, FX, and the like — basically shows that users can’t get from Hulu, which is mostly about broadcast TV.
So there you have it: Apple TV gets more content to sell more devices, and a little bit of incremental revenue from subscription sales which happen through Apple TV. Meanwhile Hulu gets wider distribution and the ability to serve ads, but gives up the customer relationship. Seems like a fair deal to me.
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