Hulu has finally responded to the chorus of subscribers who don’t want to put up with ads when they pay a monthly fee to stream movies and TV shows. The service today adds an $11.99-a-month ad-free option, while maintaining its $7.99 service with what it describes as “limited commercials.”
Both will offer the same programming. A few shows on the ad-free service — including New Girl, Scandal, How To Get Away With Murder, Grey’s Anatomy, and Marvel’s Agents Of S.H.I.E.L.D. — will have a 15-second pre-roll ad and a 30-second post roll. Hulu also offers a sampling of ad-supported shows for free to PCs and a subset of the mobile devices served by the paid services.
At $11.99, Hulu’s ad-free option would be more expensive than Netflix, which is ad-free at $7.99. But CEO Mike Hopkins tells me that it’s still less expensive than HBO Now at $14.99, and close to Showtime’s new online service at $10.99.
Recent Comments
“We did a lot of research on this,” Hopkins says. “We wouldn’t have undertaken this lightly.”
Easy to see why: Hulu is co-owned by Comcast, Disney and Fox — major owners of ad-supported cable networks. They have a lot to lose if viewers become accustomed to watching shows commercial-free, especially if they also like online alternatives enough to cut the cord with cable or satellite TV.
Hopkins says that the change “is not us exiting the ad business at all.” With new efforts to target commercials to specific viewers — for a relatively high price — “we expect ad revenue to grow dramatically.”
Hulu hopes the ad-free addition and a revved up marketing campaign will attract attention following what Hopkins calls its “spree” to beef up its programming. “All along we’ve been investing in the brand, and you’ll see us investing a lot more.”
Hulu recently made exclusive carriage deals with Turner Broadcasting, FX, and AMC Networks, and a non-exclusive one with Epix. Last year it also agreed to offer shows from Discovery Communications.
At the same time, Hulu is investing in original series including Difficult People (a comedy from Amy Poehler), The Way (a drama from Jason Katims), Casual (a comedy from Jason Reitman) and 11/22/63 (a limited series from J.J. Abrams and Stephen King).
Hopkins says he can’t predict how many people will sign up for the new ad-free offering, although “we think it’s going to be big and exciting.” Hulu said in the spring that it had about 9 million subscribers; Netflix has 42 million domestic customers.
Hulu’s recent content deals prepared for the additional offering. The “vast majority” of them are based on fixed fees, as opposed to a split of ad revenues, Hopkins says.
Still, Hulu hopes to impress advertisers with what the CEO calls its “vast data base” of information about who is viewing specific shows — and its ability to target relevant sales pitches. “Are these the type of people who might be in the market for a minivan or a hybrid — or diapers?”
Better hurry, Hulu. Apple’s announcement has left you with little window to get your shit together before you get muscled out of streaming entirely. An ad-free tier is a good idea. Matching Netflix’s price would be a better one. They’re already ad-free. Would have to drop the ad-supported tier price ($4.99?) but it’s overpriced now anyway.
And forget pre- or post-rolls on the ad-free tier. Ad-free means AD-FREE! You are just going to piss people off. Free, ad-supported shows is also a great idea, but not if it’s some hit or miss thing. Need to make this easy on the consumer and this proposal sounds like a mishmash. Sometimes I wonder if Hulu has some sort of death wish or people at the parent companies that don’t want Hulu to really compete with old media at all…
Apple hasn’t actually announced anything. There are rumors of a streaming service, but no official announcement has been made.
I support their decision, they’re offering next day episodes after all, and I’d imagine it’s simply to costly to offer that without any type of ad at all, even with Netflix’s exclusive deals it still doesn’t offer a show until a month or so after the season is over at least. Maybe part of me not caring is because Hulu Plus for me has been free the last year and a half thanks to Bing Rewards but I’ve never seen the big deal with the ads, there’s only about 5 minutes total, a far cry better than 20 minutes of ads on TV and sometimes you get the option to sit through one long one up front to get the rest without ads at all. And with dropping ratings on live TV they have to monetize these shows somehow, I will suffer advertising if it means a show has a better chance at survival.
I think you’ve been spending too much time on Apple fanboy sites.
All of the best content is locked up in long term output deals (FX, AMC, Turner, EPIX), and making shows is wayyy harder than people think. Apple missed the boat on TV.
Where’s their TV service? Delayed again? They’ve been talking about this years with nothing to show for it. Disney and Fox hold the keys to their strategy and aren’t interested in unwinding their sports channel carriage agreements.
Agreed. The Apple Announcement could change everything but until Apple launches whatever it intends to launch, Hulu is presenting a decent deal. Particularly in light of Epix exit from Netflix.
Uh, Apple didn’t “announce” anything. Variety simply gleaned their potential interest in developing original content based on an interview. There’s a substantial difference between the two.
And not every company can emulate Netflix’s business identically. Netflix is a singular, self-sustaining entity while Hulu is a joint between NBCU, Fox ABC-Disney. I mean hell, talk about starting on the back foot. I’m actually surprised that they whittled the new tier down to 45sec worth of ads for each episode of content, particularly when 30sec of that happens after the credit roll, which no ones sticks around for anyway.
In fact, that’s BETTER than HBO Now, which forces 60-90sec trailers down my throat at the top of almost every original series episode (if they’re reading this, for the love of god stop with the Ballers promos).
I’m sure Hulu will continue to improve, especially with the Epix deal, but to further become outraged by a $4 price difference in subscriptions fees… wtf dude, if you can afford to buy a television/laptop/smartphone to watch all this stuff on, you can afford $4/month.
This is why Hulu has been a bust and couldn’t find a buyer. Consumers aren’t going to pay for an ad-free service that still has ads. Plus there is nothing stopping Hulu from increasing the number of shows that have ads on the ad-free service. So the list is small now but could grow very big in the future. Netflix has nothing to worry about. They sell an ad-free service that is truly ad-free. What a revolutionary idea!
So if I were to pay for Hulu’s $7.99 service, I’d still get commercials? So I have to pay even more NOT to get commercials? So Hulu’s ‘killer app’ is to charge more for a feature that subscribers to a paid television series shouldn’t have to deal with in the first place?
Sounds like a real winner to me.
How many subscribers does Hulu have again?
Less and less as other formats spring up.
Hulu = poo. Criterion really should spin off into their own thing (or make a deal with Amazon or Netflix)… they are the only thing Hulu has going for it.
True but it was Criterion’s choice to sign with Hulu and Criterion recently renewed their deal with Hulu. It was much better when they were on Netflix.
I read the headline and got excited, then read the story and saw that even their AD-FREE service will be having a 15-second pre-roll AD and a 30-second post-roll AD. Why can Hulu NOT figure this out? As a consumer, I have zero problem sitting through ads to get a service for free. But, it they’re gonna put up a pay wall, I expect the service to then be paid for those monthly subscription fees, especially if it’s touted as AD-FREE (and this pay level is literally created in response to the people that didn’t like seeing ads when they were paying for the service).
Hello everyone —- I subscribe to all 3 major “alternative services” Hulu, Amazon, and Netflix. I agree with Cory I don’t mind the ads. In fact, I like being asked which ad I “find relevant” so at least they’re products I’m seriously considering to buy or normally buy. Also I don’t understand the comparison people make between Hulu and Netflix because aside from their in-house products, Netflix’s product line is primarily archived shows while Hulu shows current episodes in the current season which is why I don’t mind paying for the ads. $7.99 for ads that are a fraction of ads on network TV sounds reasonable to me. Thank you for letting me chime in :)
No one watches commercials anymore. The majority of people don’t watch the live broadcast—-they start watching 15 minutes into it which is usually enough time to skip commercials. Paying for TV via commercials has reached the tipping point just as all gasoline cars have reached theirs. How will this play out? The Networks with the best programming will survive, those without reliant on commercials will be gone.
People keep going on and on about the pre and post-roll ads on the new “ad-free” Hulu tier. But it’s only for 7 shows! No ads on anything else. And comparing Hulu to Netflix isn’t quite apt. Hulu has many big prime time shows available next day and a few cable shows a few weeks after airing (along with a few original series and a growing number of movies). Instead, think of ad-free Hulu as a replacement for the major broadcast networks plus an HD DVR. You typically can’t get that for $12 a month from cable, even if bundled in with your internet service.