Hulu Hits Video Game Consoles as it Moves Towards Subscription-Based Format

Hulu is coming to Micrsoft’s (MSFT) Xbox 360 and Apple Inc.‘s (AAPL) iPad in addition to other consumer electronic devices according to a report from Reuters. The spread of the web video joint venture owned by News Corp (NWS), General Electric (GE) subsidiary NBC Universal and Walt Disney (DI) owned network ABC, will coincide with its shift to a subscription pay model according to Reuters’ two unnamed sources. Hulu has been purely advertisement supported since its launch in 2008, a business model that earned the website an estimated $100 million in fiscal year 2009.

It is rumored that recently aired episodes of popular television shows like The Simpsons and 30 Rock will remain free for a limited period of time while archived content, including hundreds of feature length movies, will only be accessible via a paid subscription. There is no word on what Hulu might charge consumers under the new business model

News Corps, Disney, and GE shareholders should be wary of the shift away from Hulu’s ad supported business model. Hulu’s audience has grown consistently over the past twelve months. Internet marketing research company comScore (SCOR) reported 903 million video streams on Hulu in January 2010, second only to Google’s (GOOG) YouTube free video website. While Hulu will undoubtedly benefit from the expanded audience offered by Xbox 360 and iPad support, it remains to be seen whether audiences will be willing to pay for access to content that was previously free.

There is evidence that the proposed business model might be a huge success for Hulu, though. Video rental service Netflix (NFLX) currently has more than 10 million paid subscribers, an increasing number of whom access Netflix purely through streaming, internet-connected devices. Netflix first began offering video streaming on Microsoft’s Xbox 360 in 2008, and the service is now available on Apple’s iPad and iPhone, the� Nintendo (NTDOY) Wii, Sony (SNE) Playstation 3, and TiVo (TiVo) digital video recorders. Netflix, unlike Hulu, is completely free of advertising. It’s questionable whether Hulu’s parent companies will be willing to sacrifice ad revenue in the shift to a subscription business model.

Whether or not Hulu transforms into a subscription service to rival Netflix, the proliferation of the service can only help the beleaguered NBC Universal. The broadcasting company is still finalizing a buyout that would see cable company Comcast (CMCSA) take a 51% controlling interest in the company, leaving GE with just 49%. Giving audiences increased access in a variety of outlets might be the only way NBC can grow interest in their flagging primetime line up.

While Hulu has yet to make an official statement, more details should come out in the coming weeks.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.