Are Microsoft And Hulu In Bed Together?

Despite the unsavory mental image that headline conjures, there may be reason to believe that the currently-free Web TV site Hulu will show up as a service on Microsoft’s Xbox Live channel.

According to a “very reliable source (who has never been wrong before)”, this year’s E3 (Electronic Entertainment Expo) will witness the announcement that Hulu will soon be available for streaming content over the Xbox 360, much the same way that Netflix already is. However, Netflix is only available for paying customers, and Hulu does not yet have a subscription model. For Hulu to suddenly become a paid service — and on a video game console, no less — seems strange.

Why pay to watch TV shows on your Xbox 360 when you could just navigate to Hulu’s site and get the same content for free? If this rumor is true, does that mean that Hulu will finally force users to pay for its service?

Given the Xbox’s popularity, a deal with Microsoft does seem to be a good fit for Hulu’s beleagured model, though a lot of the draw for the site is the fact that it has relatively fewer ads than straight television. If not a new paid service, might we expect more ads instead? We’ll know more on June 14th, when Microsoft hits the stage.