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Hulu to Offer Ad-Free Streaming Plan

Shirley Pelts

Must-Know Online Video Streaming Updates

(Continued from Prior Part)

Ad-free streaming at $11.99

The Wall Street Journal reported on September 2, 2015, that Hulu is offering an ad-free option plan for its users priced at $11.99 per month. Currently, Hulu’s free service is ad-supported, while its $7.99-per-month service provides content with fewer ads.

Hulu has made some strategic changes in the past year to respond to stiff competition from other OTT (over-the-top) players in the market such as Netflix (NFLX) and Amazon Prime Instant Video (AMZN).

Hulu is also acquiring original content or acquiring exclusive SVOD (subscription video-on-demand) rights. It recently acquired exclusive SVOD rights to a variety of programming from Turner Broadcasting (TWX). You can get a diversified exposure to Time Warner by investing in the iShares Russell 1000 Growth Index ETF (IWF), which holds 0.29% of the stock.

According to an AdWeek report on August 25, Hulu is offering programmatic advertising buying in partnership with Oracle’s Data Management Platform (ORCL) and video ad platform LiveRail, which is owned by Facebook (FB). Programmatic ad buying is a technological framework for conducting automatic real-time auctions of digital display ads through an ad exchange.

As the chart above indicates, Hulu offers a basic ad-supported subscription plan for $7.99 per month. It remains to be seen how well Hulu’s ad-free premium plan priced at $11.99 per month will be received, since Netflix’s ad-free subscription plans average $10 per month. On the other hand, Time Warner’s HBO Now and Dish Network’s (DISH) OTT offerings are slightly expensive at $15 and $20, respectively.

Why the change of strategy?

It appears that Hulu is adopting a two-pronged strategy to differentiate its offerings from its competitors. In addition to looking at programmatic ad buying to better monetize its content, Hulu is considering the option of launching an ad-free premium plan for users who are tired of ads and may move to competitors.

Further, Hulu is trying to bring in new users by strengthening its offerings through original content. However, in the midst of this churn, the company still could rake in revenue through better monetization of its content through ads.

Continue to Next Part

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