Tuesday, April 5, 2011

Hulu Plus Could Cause More Cord Shaving

As we discuss the cable operator's concern with downgrades and other cord shaving tactics, let's not forget the success that Hulu is having. Hard to believe, but its subscription service is attracting consumers and is poised to exceed one million subscribers this year. And with a two tier revenue stream of subscriber fees and advertising, Hulu is turning those digital pennies into digital dollars quicker than anyone might have predicted. "Mr. Kilar (Hulu's CEO) also reiterated that the company is on track to approach $500 million in revenue in 2011, up from $263 million in 2010. Its first-quarter revenue grew 90% from 2010."

The warning signs are there for the cable operators to act and to act loudly. What starts out as a small leak in the dam could quickly become a serious problem as more consumers switch to online only for their video consumption. Cable operators must do more to establish themselves as the communication aggregator in the home. Bring on mobility; develop a video security business; build out a national WIFI consortium with the other cable operators; become the indispensable link to the home and its inhabitants. Otherwise, consumers will keep shaving and cutting their service.

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