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Carolina law, old tensions and a campaign issue 12:27pm EST Discussed 143 Gay marriage a threat to humanity’s future-Pope 131 Buffett to GOP: You pay and so will I 99 Romney opens 21-point lead in South Carolina: Reuters/Ipsos poll Watched Italian cruise ship runs aground, three dead Sat, Jan 14 2012 Iranian military boats approach U.S. vessels: Pentagon Fri, Jan 13 2012 Blazing Korean ship crew missing Wed, Jan 11 2012 Hulu challenges cable with first original drama Tweet Share this Email Print Related News Exclusive: Microsoft Web TV subscription plan on hold Wed, Jan 11 2012 YouTube eyes gadgets, channels to boost viewership Tue, Jan 10 2012 Netflix sparks price war with UK launch Mon, Jan 9 2012 Analysis & Opinion Tech wrap: Microsoft presses pause on Web TV Familiar script: Home entertainment spending slips Related Topics Entertainment » Fashion » Tech » Television » By Yinka Adegoke Sun Jan 15, 2012 4:05pm EST (Reuters) - Hulu, the popular online video service, has taken another step to becoming a full-fledged alternative to cable television by commissioning its first scripted original TV show to go live next month. The new political documentary-style drama "Battleground" is set in Wisconsin and executive-produced by JD Walsh, Hagai Shaham and Marc Webb. It follows Hulu's first original documentary series Morgan Spurlock's "A Day In The Life." The majority of Hulu's programming to date has been licensed from its parent companies, News Corp, Walt Disney Co and Comcast Corp's NBC Universal, as well as other program makers. Andy Forsell, Hulu's programming executive, said Spurlock's show had been a success based on data it collected on its audience, but he declined to reveal the program's view counts. Spurlock's series is being followed up with a second season and being joined by another six-episode documentary series called "Up to Speed" by Richard Linklater, who is perhaps best known for movies "Dazed and Confused" and "School of Rock". The challenge for Hulu is to ensure it can generate a return on investment in expensive content like scripted drama, which is typically more costly than producing a documentary or reality show. "We can make the economics work, I've got a budget for originals but there's not the same pressure as a traditional network since we don't have worry about filling airtime," Forsell said. The original shows will be available on Hulu's free Web service rather than just to its paying Hulu Plus subscribers as the start-up increases its user base and builds its reputation for original programming. But Hulu Chief Executive Jason Kilar said the dual revenue model of advertising and subscription fees is key to Hulu's future. "At scale, our model allows us to profitably pay content owners approximately 50 percent more in content licensing fees per subscriber when compared to other similarly priced online subscription services," Kilar said in a blog post on Friday. PAYING SUBSCRIBERS Hulu said on Friday it had more than 1.5 million paying subscribers at the end of 2011, and revenue grew 60 percent to $420 million. Early last year, Kilar forecast that Hulu would generate around $500 million in revenue during 2011. The revenue miss was indirectly blamed on a "soft advertising market" in the second half of the year. Like other Web companies trying to bring more TV shows and movies online, Hulu is in a race with rival Netflix Inc to buy and develop more content to add to and maintain its subscriber base. Kilar said the company will spend around $500 million on content in 2012 covering new content acquisition, re-licensing existing content on the service and originals. It is an increase from the $375 million it said it spent last year. Netflix, which has some 23 million U.S. subscribers, said last March it had secured exclusive rights to the 26-episode television series "House of Cards" a political thriller starring Kevin Spacey and directed by David Fincher. It was reported last year that Netflix would spend around $100 million to produce the show. Services like Netflix are increasingly being recognized as direct competition or replacements for premium cable channels such as Time Warner Inc's HBO and CBS Corp's Showtime. (Reporting By Yinka Adegoke, editing by Maureen Bavdek) Entertainment Fashion Tech Television Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. 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