Hulu’s threat to cable TV depends comes down to price

Hulu

Cord cutters are holding their breath as they wait for Hulu to unveil its streaming TV bundle service in the first quarter of 2017.

The service has received plenty of hype since being announced at the beginning of the year. For anywhere between $20 and $40 per month — at least that’s the price analysts, journalists and tech rumor gurus are throwing out there — a subscriber can get access to three of the four broadcast networks plus dozens of popular cable channels.

What’s going to make or break the service is the price. Most cord cutters could swallow $20 per month. Up it to $30 and you lose a significant portion. $40? You’re essentially selling a streaming product at a cable TV price. What about $50? Nope.

According to a recent Wall Street Journal report, analysts believe Hulu will go for a lower price and eat up some of its profits on the service in order to lure in subscribers.

“But the traditional programmer business model remains quite attractive to TV networks, and the economics of undercutting pay-TV may simply not make sense,” writes Miriam Gottfried.

In other words, broadcast and cable networks depend on retransmission money that makes up a monthly cable bill. It’s a lucrative model for TV networks.

For now, the WSJ is telling cable investors that while Hulu’s service could be disruptive, they shouldn’t lose much sleep over it.

We’ll see what 2017 brings.

Andrew Dodson

Andrew Dodson is a journalist from Michigan who writes for MLive.com, the state's top online news source. Email him at andrewdodson@streamingobserver.com.
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