Going back as far as 8 months ago we have been hearing rumors about a Hulu subscription plan headed our way.  But who would have guessed the first iteration of such a service would be coming via Xbox Live?  GearLive broke the story last night that a “reliable source” has indicated that Microsoft will announce at E3 (Electronic Entertainment Expo hosted by the Entertainment Software Association) some sort of subscription model similar to how Xbox Live users are able to subscribe to Netflix content through their systems.

This also seems to shed some light on why Hulu cut its service off from Playstation 3 users last year.  If you recall, prior to June 2009, a Playstation 3 owner could watch Hulu on their big screen via the built in Web browser on the PS3 that contained Flash support.  But on June 27th of last year, Hulu pulled the plug and began blocking access to its site from any PS3 browser.  This unexplained action now seems to make some sense.  Why in the world would an Xbox360 owner pay a subscription fee for something that a PS3 owner was getting access to for free.  So the plug is pulled on PS3 access, you wait a year for most of the market to forget about it, and then release your subscription plan on the Xbox.  Which surely means a PS3 variety would be soon to follow as well.

Things I would like to see for this to be worth my money:

1. No Partial Catalog.  If you are paying for the service, then access to at least the same amount of content available for free through the traditional computer access should be the standard.
2. Real Currency Please.  Money for points is always very irritating.  And it is specifically designed to not be understood.  When a consumer has to trade currency that they use in real life for fake currency that is essentially made up numbers, it alters their understanding of value.  It’s actually a little unethical in my mind, but that’s for the market to decide.  However, in the same vein as Netflix on Xbox, traditional billing would be preferable.
3. Traditional Billing Cycles.  Hulu has a real opportunity here to start testing the waters for crazy types of billing cycles.  I’m not going to say that there isn’t something very unique they could come up with.  They could very easily pull out something like “buy 10 TV episodes for $5″ that people would be OK with.  But even if that happens, I hope that they also offer a traditional monthly/quarterly/yearly all you can eat subscription.

All will be answered sometime between June 14th and June 17th when the curtain drops at E3.

UPDATE: 1UP is reporting that an anonymous source close to Microsoft has stated that a Hulu application for Xbox Live is “fully up and running” but that the project is currently having issues with red tape due to working out rights issues with the content companies.  In the end, even with this additional info nothing has really changed.  Either we will or we won’t see an announcement made at E3 and that will ultimately determine the long and short of it.