[TomGuy]

I agree that the 2 options would be good.

Several years ago I followed some ‘forum’ discussions/complaint sessions regarding Hulu+Plus. Many wondered why Plus would not offer a commercial-free subscription service. Plus officials would just respond that the current (subscription with ads) was what they offered.

At the time, I came across an article interviewing one of the Hulu Plus officials. He said that they eventually foresaw Hulu Plus offering as many commercials as regular TV.

[AustinBill]

That's because for traditional broadcasters (and Hulu is just a front-organization for traditional broadcasters--look at their owners) the ad buyer is the customer and all businesses try to best serve their customers.

Changing mindset and business model so that the viewer is the customer and their interests come first is completely alien to those who've been so successful with the former mindset. That's why it's unlikely that they will successfully navigate the transition and instead will be disrupted by new players who put the viewer first from the outset.