Commentary

Hulu Gets Into Ad-Free Game - Too Late?

by Wayne Friedman , Staff Writer, July 22, 2015

For Hulu, this has been a long time in coming: an advertising-free subscription version of its service.But is it too late?

That service would put it right smack in the race with Netflix, Amazon Prime Video, as well as the likes of HBO Now.

Hulu had previously offered up a free-to-consumers, advertising-supported version -- Hulu -- as well as a limited advertising version-- Hulu Plus. But some of these earlier efforts must have been a miscalculation.

Why did it take so long for Hulu to do this, giving Netflix a tremendous jump on the business? Look at its owners and that’ll tell you much. Three major media owners of Hulu -- Walt Disney, 21st Century Fox, and Comcast Corp. (a non-voting partner) -- have based much of their traditional TV businesses in large part on advertising.

If these media companies are entrenched in these areas, you can understand why: TV advertising has provided lots of upside to companies for many years. Only now are they coming to realize consumers want lots of options -- including those free of advertising.

All this may seem confusing, but consumers continue to flock to spend $8.99 on Netflix.

Hulu executives may have believed it was different than Netflix -- that it was essentially a single ad-free movie service, more like HBO — and that consumers would act accordingly.

But that’s where the Hulu executives went wrong. Netflix seemingly is everywhere, offering libraries of off-network TV series and theatrically run movies, as well as original TV and movie content.

Hulu’s new effort will be around $12 to $14 a month -- well higher than the $8.99 price point of Netflix.

Does that create confusion -- or clarity?

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4 comments about "Hulu Gets Into Ad-Free Game - Too Late?".

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Ed Papazian from Media Dynamics Inc, July 22, 2015 at 5:10 p.m.
It will be interesting to see whether the broadcast TV networks take the gloves off and begin to really compete with Netflix. One thing they might do is to pay the producers of their prime time shows an added fee not to license their reruns to Netflix, but give them, instead, to Hulu on an "exclusive" basis. Then, again, maybe the networks still think that they are "mass audience" programmers so it doesn't really matter if Netflix steals more of their viewing tonnage using shows that the networks, themselves, initiated and ran originally.
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Thomas Siebert from BENEVOLENT PROPAGANDA, July 22, 2015 at 6:09 p.m.

Better late than never, I suppose, but $12-14 a month is too much. I got rid of HULU Plus because I couldnt stand the commercials, but they're gonna have to hit $10 or less before I give it another shot.

Audrey Thompson-Plager from Aarki, July 23, 2015 at 2:44 p.m.

I think it's simplistic to assume the pricing arrangements for Netflix and Hulu is attributed to it's owners. You're not citing the origins of Netflix which was born as a subscription based "rental system" of movies on cds sent to the home. When content delivery began moving from through the mail to streaming they simply kept true to the subsciption model. I don't believe Netflix ever seriously considered an ad based business.

Randall Tinfow from CLICK-VIDEO LLC, July 23, 2015 at 10:18 p.m.

$12/month is nothing if it's replacing a premium cabl subscription at $150+. VOD is what viewers want.

The networks will be left fighting for events - sports and the likes of American Idol - which are boosted by real time participation via second screens. The value of sports packages is going to thru the roof.