How Hulu's Andy Forssell Will Spend $500 Million; Why 'Community' Trumps 'Two and a Half Men' (Q&A)

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, how to save struggling shows and the future of Hulu ownership.

With a half-billion dollar budget in 2012, the online TV juggernaut's dealmaker breaks down the company's programming strategy and how it differs from Netflix.

This story first appeared in the Jan. 27 issue of The Hollywood Reporter magazine.

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 series A 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, how to save struggling shows and the future of Hulu ownership.

The Hollywood Reporter: Last February, Jason Kilar angered Hulu's studio owners when he wrote: "History has shown that incumbents tend to fight trends that challenge established ways and, in the process, lose focus on what matters most: customers." Do you agree?

Andy Forssell: I do. Look, I think the danger that all big businesses have is, "How much time am I spending defending my existing businesses versus investing in the new ones?" Their businesses are going pretty well today. Nielsen numbers are not bad. Multichannel households fluctuate, but for the most part that hasn't fallen apart. It's a natural tendency for those big businesses to think, "Oh, the whole linear model's working pretty well." The way we can help guard against that is to make the business models work better and better so that we pick up plenty of viewers and get them to watch traditional TV versus Plants vs. Zombies.

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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.

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THR: What's the ideal way to launch a series online: multiple episodes at once as Netflix is doing for Lilyhammer or a traditional weekly TV model?

Forssell: That's a subject of active debate around here. We've [stuck] with the one-episode-a-week model because the audience understands it. I think we'll experiment over the next few years.

THR: Netflix is set to revive Arrested Development. Did you consider doing that?

Forssell: We absolutely would consider it, but I won't comment on the actualities. Fox had a tough call to make [when it canceled the show in 2006] because they were looking at an economic system where Arrested didn't make sense. Today it would have found a way to live beyond three seasons. Five other options would appear that would make total sense, which is great for smart TV. People use the term fragmentation with almost a negative connotation, but I think it's all positive. It means people get what they love and companies like Hulu are going to create the economic means and models within which that's OK.

THR: Who is the competition? Are your owners your rivals?

Forssell: The articles you'll see written will focus on online versus cable or old-style networks versus new-style aggregators. But if you pull back at the 50,000-foot level, the real game is about screen time. The big question for the industry is, how much of that screen time will be spent with traditional TV and movies vs. Facebook or playing Plants vs. Zombies or watching stuff on YouTube? Having been birthed by traditional content owners, we look at how we can help make sure that long-form traditional content holds its own, if not claims more screen time.

THR: How do Hulu's plans differ from Netflix's?

Forssell: We started with ads. If you're going to deal in current television, you've got to have ads. The media companies don't want ad-free versions out there. Netflix started in the DVD window, and then when they jumped to streaming, that's largely where they play. So we think more in terms of freshness and what's new. Where they'll go next, we don't know. Obviously, they're investing in originals, which is great. Again, we want stuff to get made, and it could potentially be a good complement.

THR: Your ownership structure is anything but simple. How does it actually work?

Forssell: For 95 percent of what we do, who owns us and who sits on the board doesn't really impact us. Big strategic moves become board-level discussions, but that's two or three times a year and it has been amazingly collaborative. People make offhanded jokes that our board meetings must be crazy, but they're really not.

THR: In October, Hulu said it was no longer for sale. Will the company reconsider?

Forssell: Given that there's a financial investor involved [Providence Equity Partners], the original vision for the company was that there would be some inflection point and that the consortium model wouldn't hold forever. [The structure] was critical to birth this thing, but it wasn't necessary or even healthy for the really long term. So, absolutely, I think there will be a change. But is it in 2012 or 2016? Who knows?

THR: Why did Hulu back out? Were the reported $1.5 billion to $2 billion offers too low?

Forssell: You've got to talk to the investors.

THR: What about Jason Kilar's future with the company?

Forssell: You've got to ask him, but I will tell you that I've never seen a guy more committed.

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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.

THR: CBS is the only network holdout. Any movement?

Forssell: We're in business with them in Japan directly, and we're in business with them in a big way via the CW deal [five years of streaming in-season episodes on Hulu Plus]. But if you look at it at a high level, of all the networks -- and I don't mean this as some sort of backhanded criticism of them -- have the highest median age. So in that sense, they rightfully should be the least worried about that whole screen-time pie -- not that they're asleep, by any means.

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BATTLEGROUND: Hulu's first scripted series puts a political spin on the faux doc

A single-camera workplace dramedy shot in a faux documentary style, Hulu's first scripted original series is set in the election battleground state of Wisconsin, the childhood home of longtime friends J.D. Walsh and Marc Webb. "There's a perception that it's hard to do a show about politics," says Webb, director of this summer's The Amazing Spider-Man. "But this is not about politics; it's about elections. And people may hate politics, but they love elections." The project initially was bought by Fox's comedy team in 2011, but the network ultimately passed. To hear Webb tell it, that was a blessing in disguise, as Hulu swooped in and let it be a true dramedy (albeit at a reduced cost). "It wasn't 18 jokes per page," he says, "and Hulu wasn't afraid of that." Battleground, which Webb insists is not a "web series" but rather "a TV show that's presented online," will launch with weekly episodes Feb. 14, timed to roll out during GOP primary season.

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MOVING BEYOND RERUNS: Hulu hopes to lure viewers with newsmagazine-style programming in the tradition of the big networks

Up to Speed: The series, from Richard Linklater, who will direct six episodes, follows host, philosopher and tour guide Timothy "Speed" Levitch as he helps viewers discover famed locations around the country.

A Day in the Life: When Hulu's first original returns in March, the docuseries from Morgan Spurlock will spend time with such stars as comedian Marc Maron and UFC fighter Jason "Mayhem" Miller.

The Morning After: This entertainment show takes a look at the latest news and gossip. Since the series' January 2011 launch, five- to six-minute episodes run daily Monday to Friday on the site.