Hulu is leaving some serious money on the table.
While its parent companies NBC Universal, News Corp. and Disney wrestle with the possibility of imposing a subscription fee on Hulu to offset what they perceive as lost ad revenue from TV, they might be better off simply dialing up the number of ads that run on the site, according to comScore.
The Web researcher released new research today at the Advertising Research Foundation’s annual convention and expo in New York which found that people who watch TV shows on the Web are far more tolerant of ads than perhaps once thought, and would actually stand for more clutter. Specifically, comScore found that while sites like Hulu typically serve around four minutes of ads for every hour of content, users would be OK with six to seven minutes of ads.
That flies in the face of conventional thinking in the industry, which is that users who elect to watch TV shows on the Web are ad avoiders by nature and don’t understand the value exchange when they consume free content.
During a presentation at the ARF gathering on Tuesday, Tania Yuki, director of cross media and video products at comScore, poked holes in that theory. “This is not about platform wars,” she said. “TV is the preferred viewing platform for most.”
According to comScore’s research, among fans of scripted, prime-time programming, just 6 percent are “online-only” viewers who either don’t subscribe to cable or simply prefer the medium. Nearly two-thirds (65 percent) of the roughly 2,000 people comScore surveyed are strictly TV viewers, while 29 percent are cross-platform consumers — meaning they watch their favorite episodes of Lost or Desperate Housewives on TV — and sometimes online.
The reason most online viewers (71 percent) watch shows on the Web is that they missed a recent episode on TV. And 67 percent of respondents said they chose the Web for convenience, while just 38 percent said their motivation to chose online over TV was that it features less ads.
Thus, sites like Hulu, Fancast and the broadcast networks’ sites would be smart to stream more ads than they currently do. “We [as an industry] are leaving money on the table,” said Yuki.
Besides money, some networks may be missing out on new audiences by not streaming certain shows on the Web, said Yuki. And the networks that are contemplating charging users to access sites like Hulu may be risking fans as well. That’s because, according to comScore’s research, online viewing begets TV viewing, since fans can catch up on new series quickly. “Video can result in new audience acquisition,” Yuki said. “Increasingly, it isn’t useful to think of these things in silos.”
Other interesting nuggets from Yuki’s presentation included a finding that younger, more cross-platform-inclined users hear about new shows in different ways. While TV promotion and friend recommendations still drive discovery, among cross-platform viewers 21 percent said they’d found out about a new show via a social network.
Also, among the still small group of Web-only TV fans, archival viewing is “much more significant,” said Yuki. These users exhibit a tendency to stockpile episodes of shows to gorge on during marathon viewing sessions — which could provide a unique monetization opportunity. “They are not a group of dissident ad avoiders,” said Yuki. “These are people that actually love TV.”