Jan 23, 2019 - Economy

Hulu slashes ad-supported prices to compete with Netflix

Hulu on the TV

Photo: Chesnot/Getty Images

Hulu is steering customers toward its ad-supported, on-demand streaming package by lowering the price.

Why it matters: When the digital ad market fell to Google and Facebook, there was a rush by streamers and publishers make money off of subscriptions. But Google and Facebook haven’t really penetrated the digital TV ad market yet, so now everyone else is racing to get a piece of it.

Details: Hulu doesn't disclose how many of its 25 million subscribers are a part of each plan. But Variety reports the "majority" of customers are on the ad-supported on-demand tier.

  • Between the lines: Hulu hopes customers will buy into the cheaper package when up against its Netflix competitor.
  • Earlier this month, Hulu said it brought in $1.5 billion in ad revenue from 2018, a 50% increase.
  • Starting Feb. 26, its ad-supported streaming tier will go from $7.99 to $5.99 per month. The ad-free VOD plan will remain unchanged, at $11.99 per month
  • Yes, but: Hulu also announced that it will begin charging viewers more for its live TV package. Hulu With Live TV will go from $39.99 to $44.99 per month.
  • This makes sense given that many of Hulu's biggest live TV competitors, like YouTube TV, Sling TV and DirectTV Now, announced live TV price hikes last summer.

The big picture: Free digital, ad-supported streaming TV companies are rising as consumers face saturated budgets for subscription content.

  • NBC Universal CEO Steve Burke on a Comcast earnings call Wednesday morning emphasized what new NBCU streaming service will do to open up its addressable advertising inventory. Burke cited that 80% of U.S. addressable households are multichannel subscribers, a rare opportunity for streamers compared to the rest of the world.
  • Viacom CEO Bob Bakish announced yesterday that the company is purchasing Pluto TV, one of the fastest-growing ad-supported streaming TV companies in America.
  • Last week, Netflix raised U.S. streaming prices for all customers, including an 18% hike on its most popular plan, the standard two-stream HD tier, from $10.99 to $12.99 per month.
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