Hulu announced it now has 17 million subscribers and suggests its revenue make up has changed a lot in the last three years. Holiday disc sales were a bust, while SVOD revenue went boom. CES shows how vendors are using AI to reinvent the viewing experience.
Chapter 1: Hulu has 17 million subscribers (1:40)
Hulu reports that it now has over 17 million subscribers to its SVOD and vMVPD services. The company did not break out how many subscribers there are to each service. Will thinks they are acquiring over a quarter of a million subscribers per month. Netflix is still growing at twice the rate as Hulu. However, the growth solidifies Hulu’s position as the number three SVOD service in the U.S.
The company also said it earned $1 billion in ad revenue in 2017. Although this sounds like a lot, I pointed out that proportionally it is less than it was a few years ago. In 2014, I estimated Hulu was earning 56% of its revenue from ads. Today, it may represent only half. The shift away from ad revenue could be because many people are opting to pay $4 a month more for Hulu’s ad-free version.
Chapter 2: Holiday video disc sales plummet (9:00)
Digital Entertainment Group reported a 22% year-over-year drop in disc sales in Q4 2017. Video rentals of all types fell 17%. SVOD revenue increased 30% in 2017. So, consumers are spending less and less on buying and renting movies, and more on access to large libraries of content like Netflix.
In 2014, SVOD took 23 cents of every dollar spent on home entertainment, and disc purchases took 39 cents. In 2017, 47 cents went to SVOD and 23 cents to purchase discs. By the end of this year, more than half of home entertainment revenue could be going to SVOD services.
Will says that Apple has started to spend serious money on content, but Apple doesn’t have a subscription video service. Since consumers seem to be preferring this model, it could be a problem iTunes is losing market share to Amazon and the two business models the store relies on are flat or declining.
Chapter 3: Smart TV makers use AI to improve experience (15:00)
Artificial intelligence was a big buzz at CES. Smart TV manufacturers are using it to improve consumer experience of their products. LG is using it to make it easier to find things to watch and so the television will automatically adapt to the way an owner uses it. Samsung is using it in its new 8K TVs to optimize the conversion of HD video to 8K resolution.
Chapter 4: Intel, voxels, and virtual reality (19:30)
Intel is working with the NFL to help create new virtual reality experiences. Intel placed dozens of 5K cameras around the field and used AI to stitch all the video information together. The company used this approach to create a voxel image, rather than a pixel image, to define the playing field space. A voxel is a pixel with volume and depth information included. Using this technology, Intel can create a virtual reality experience from anywhere on the football field.