Edible Apple

About a week ago, we reported on a rumor suggesting that the team over at Hulu was tinkering with the idea of making all of their content (currently in Flash) compatible with the iPad. At the time we noted that a Hulu app for the iPad would do gangbustsers, and that consumers would have no problem throwing down $2.99 in exchange for access to all of Hulu’s content.

Now, Peter Kafka of All Things D is reporting that while Hulu certainly is exploring the idea of putting its content onto the iPad, they believe that a subscription model is the ideal framework to set up a sustainable business model.

Hulu and its owners, three of the big broadcast TV networks, want to bring some version of the Web video service to Apple’s device.

But the most likely scenario is one in which access to Hulu on the iPad comes as part of a subscription package, multiple people familiar with the company tell me.

Hulu has been free for Web users since it launched in 2008. But its broadcast owners–GE’s (GE) NBC Universal, News Corp.’s (NWS) Fox and Disney’s (DIS) ABC–have repeatedly said they want to introduce some sort of premium version.

The problem is figuring out a way to keep the existing site free while adding new bells and whistles that consumers pay for. One idea the company and its backers like: Turning Hulu from a “one screen” service–one you’re only supposed to watch on your computer–to a “three screen” offering by adding support for TVs and mobile devices.

Hulu, though, has a lot to figure out before we can expect to see it hit the iPad, or the iPhone for that matter. For starters, needs to obtain additional licensing rights to allow it to distribute content for mobile devices. Remember, Apple had to obtain somewhat similar licensing rights from record labels in order to sell songs over the air from iTunes. Second, all of Hulu’s content is in Flash, and while the videos are reportedly encoded in H.264, getting all of that content “iPad ready” in time for the iPad launch doesn’t seem realistic. And finally, Hulu still hasn’t struck a deal with any device manufacturers to deeply integrate their service with 3rd party hardware, a’la Netflix and the Xbox 360 and Youtube’s presence on the iPhone.