Where Does Hulu Rate In Relation To Netflix?

What is Netflix’s real competition? Hulu may be the sleeping giant in the streaming world, especially for its big TV network/content providing owners.

But there is a bothersome factor: Is it because of its limited advertising-supported service? Hulu pulls in around $1 billion in advertising per year -- going to $1.4 billion in two years, says eMarketer. That means something.

That said, calculating the exact number of ad-supported subscribers and Hulu advertising revenue can be tricky. Overall, some believe ad-supported subscribers represent about half its current 20 million total; the other half go to its ad-free service.

Digital media researcher nScreenMedia believes 85% of Hulu’s 20 million comes from ad-supported subscribers -- with only 15% being ad-free, the latter being more of direct competitor to Netflix.

In either case, Hulu still seems to be hedging for the future: running ad-free and ad-supported service. This is not where Netflix believes the market is. In fact, the company has been adamant that any form of ad-supported video is not in its future.

Hulu’s current limited ad-supported service is priced at $7.99 a month -- somewhat of a bargain versus Netflix's standard $10.99 a month plan. Much of this will be transformed going forward by Walt Disney, its majority owner. Disney now has a 60% equity stake in Hulu, thanks to its acquisition of 21st Century Fox assets.

According to nScreenMedia, Hulu is at $2.6 billion in total annual revenue -- with 38% coming from ad sales. Sounds good. But a nagging element here -- it continues to lose around $1 billion a year.

Disney needs to have a cleaner consumer plan for growth -- as well as determine whether it wants to burn more TV/movie production dollars in the nonstop race against Netflix, which now spends $8 billion a year on TV shows/movies. It also needs to juggle its own in-house efforts when it come to its forthcoming movies/TV OTT app.

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