Hulu To Invest $500 Million In Original Content In 2012

By Lacey Rose for The Hollywood Reporter

Nearly five years into a venture backed by rivals Disney, NBCUniversal and News Corp., video hub Hulu is going where it’s not yet gone: original scripted programming. The online video site’s first entry, Battleground, is a workplace dramedy that explores the behind-the-scenes chaos of unruly political campaign workers from (500) Days of Summer’s Marc Webb and actor-turned-director JD Walsh. The project, set to launch Feb. 14, joins a second season of Morgan Spurlock’s documentary seriesA Day in the Life and Richard Linklater’s travel show Up to Speed.

The man behind the move is Hulu’s senior vp content, Andy Forssell, 46, a Harvard Business School pal of chief executive Jason Kilar who has been at the site since its inception in 2007. Hulu’s $7.99-a-month paid service, Hulu Plus, now offers north of 1.5 million subscribers some 45,000 TV episodes. (Visitors to the free, ad-supported site can watch nearly 37,000.) The result is about $420 million in revenue in 2011 and plans to invest $500 million in content in 2012. The Pennsylvania-born father of three, who began his career as an Army captain, sat down with THR in Hulu’s Los Angeles headquarters to discuss his plans to bulk up on originals.

THR: How seriously are you moving into scripted originals?

Forssell: Where we started was working with big network partners on [airing] last night’s TV, as well as great series from five, 10, 20 years ago. That will remain the core of our business for some time to come. But we’ve developed a lot of relationships with great content owners, and we see stories that aren’t getting told because they haven’t found a home. We’re not going to compete with our biggest partners for content because they do a great job and their stuff is going to end up on Hulu anyway.

THR: How would you define an ideal Hulu show?

Forssell: We’ll look for content that’s beloved not beliked. The content that really pays off and punches above its weight in our ecosystem is a show that somebody’s going to see and then they want to go e-mail five of their friends or get on Facebook and post about it.

THR: Like Community, for which you recently struck a digital syndication deal? 

Forssell: Exactly. In our world, we’d much rather have Community than Two and a Half Men, and I don’t mean that as a criticism of Two and a Half Men. It’s great for advertisers that want to use that show as a proxy to get to this big audience. But for us, we’re much more excited about Community because while it’s a smaller audience, it’s an audience that self-organizes online. They’ll not only tell their friends to go watch it, they’ll spend time convincing someone on a bus to watch it.

THR: Networks spend some $3 million on an episode of TV. How will Hulu’s budgets compare?

Forssell: I don’t want to share numbers, but they’re significantly less. But still, you will see, it’s TV, and to get that quality, you’ve got to spend a certain amount of money.

THR: Netflix is believed to be spending $100 million on 26 episodes of House of Cards. Too much?

Forssell: I don’t think we’ll know until we see it on the screen … It’s certainly an aggressive number, but I think it’s a great experiment for the industry in a lot of ways.

THR: Where are Hulu’s growth opportunities?

Forssell: International is a huge upside for us. We’ve done just one market [Japan], and you’ll see us continue to invest there. Rights are the core challenge in any market, and that’s why we haven’t moved more quickly. But it’s been our conviction since day one that in the long term, if half the Hulu revenues don’t come from outside the U.S., we haven’t managed it effectively.

This is an excerpt. Click here to read the full interview.