BROADWAY — Pioneering Internet television provider Hulu is moving to Santa Monica, joining a plethora of high-tech and entertainment companies that have helped the city by the sea earn the moniker Silicon Beach.
Although officials at Hulu, which offers prime-time television shows for free online, would not comment, city officials last week confirmed that the 3-year-old company owned by Walt Disney Co., News Corp. and NBCUniversal has signed a lease for space in the former Yahoo! Center, now known as the Colorado Center.
Hulu will occupy over 95,000 square feet of space that formerly housed Gensler, a global architecture firm that moved to downtown Los Angeles last year, city officials said. A date for the move has not yet been confirmed, nor is it clear if the Santa Monica location will be the company’s headquarters.
“Hulu is another example of a cutting-edge technology company choosing Santa Monica for sound business reasons,” said City Manager Rod Gould. “When we met with them, we stressed the super-fast and cost-effective broadband we are bringing to their new location that will be a competitive advantage as well as the fast permitting and plan checking and improved inspection service we now provide.”
The Santa Monica Alliance, a collaboration between the Santa Monica Chamber of Commerce and City Hall to attract and retain major employers, lobbied for Hulu to move. The company, which increased revenues last year by 60 percent to $420 million, is currently located just outside Santa Monica near the corner of Olympic Boulevard and Bundy Drive.
Gould said that while other cities are offering tax holidays or rebates to attract businesses, Santa Monica’s draws are the “very high levels of municipal services and infrastructure maintenance that would be valued by their employees, when most cities are struggling with declining services and staffing.”
“We are proud to welcome Hulu to Santa Monica,” Gould added.
Hulu promises to bring scores if not hundreds of employees to Santa Monica. That means more people eating at local restaurants for lunch and hitting gyms to burn off those calories after work. Jennifer Taylor with City Hall’s Buy Local campaign said many of Hulu’s employees live in Santa Monica so having the company locate closer to their homes could help with the city’s live-work imbalance and could mean less cars on the roads as employees bike or bus to work.
“[Hulu] is going to help create a lot of jobs in the area,” Taylor said.
Hulu attracts some 27 million users every month, according to ComScore Video Metrix. A large part of Hulu’s appeal has been its modest reliance upon commercials — only 3 1/2 minutes in a half-hour prime-time show, compared with eight minutes on TV.
Users can find popular shows like “Glee” and “Modern Family” without having to have cable or satellite service.
That could pose problems down the road as Hulu’s parent companies rely on some $30 billion annually in programming fees that pour into the media giants from cable, satellite and telecom providers, according to a report in the L.A. Times. Those fees support the cost of producing content, and undercutting them by steering viewers away from TV and to the Internet would jeopardize the sturdiest financial leg of the TV industry.
To boost revenue and in a bid to capture the tablet and smartphone market, Hulu began urging people last year to sign up for the $7.99-a-month subscription service Hulu Plus, The Times reported. The company recently said it was “on pace” to reach 1 million subscribers by the end of the year.
The media company owners, in another move to keep viewers choosing TV over the Internet for watching shows, have proposed delaying the availability of free episodes, according to The Times. At present, users can go to Hulu to watch episodes that aired the previous night on TV. But viewers may eventually have to wait weeks after the network airing to see the episode on Hulu.
Another decision looms. This summer, Hulu’s exclusive rights to distribute ABC, Fox and NBC programming online begin to expire. The companies have been slow to renew, most likely waiting to see how the next generation of Hulu takes shape.