Popular online video site, Hulu, announced at a television tradeshow last week that they plan to start charging users at some point in 2010. Hulu has gained popularity, especially with Millennial and Generation Y users for its free content (with commercials) that includes movies, videos and even television programs like Family Guy and "The Daily Show."
Hulu's profit model comes from being paid for advertising much like the standard broadcast television model. Its perceived "free" business model is a key part of the site's appeal with a generation of kids who can't or won't find jobs. This is a generation of youth who also think that content "should be free," unlike older users who have historically have been willing to pay for VHS, Laserdisc, DVD-Video and or Blu-ray content as well as pay cable and digital satellite services.
If Hulu goes through with their move to charge for content, they will compete more with the highly popular and completely integrated Apple iTunes store which is going to be a tough battle. When younger buyers want commercial-free content they tend to look to Apple. Time will tell if Hulu can get into that space and carve out a niche.