Hulu Launches Ad-Free Plan, Adding Revenue Stream

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Hulu has launched an $11.99, advertising-free monthly subscription plan, adding to the number of ways the streaming subscription service makes money from its content and putting it in direct competition with Netflix.

Hulu to this point generated revenue from ad-supported content and a monthly $7.99 limited-commercial plan. Creating a plan without advertisements is a nod to ad-free rivals Netflix and Amazon Prime and to consumers’ increasing aversion to advertisements.

“Many of our customers have asked us for a commercial-free option, and so today we are excited to introduce just that,” Hulu Chief Executive Mike Hopkins said in a blog post.

Jim Nail, principal analyst at Forrester, said the ad-free option reflects Hulu’s interest in experimenting with different revenue models.

“They’ve got a couple of different trial balloons to find what is the right way to maximize revenue from content,” he said. What’s more, there is an “underlying threat to the advertising model so that they feel that they have to offer an ad-free solution these days.”

Many of Hulu’s business decisions reflect its joint ownership by broadcasters NBCUniversal, Fox Broadcasting Co. and Walt Disney Co., Nail said. Those owners rely heavily on advertising revenue and cable subscription fees, business models that are shrinking as consumers cut their cable television subscription plans and install ad blockers.

“Broadcast and cable television networks are in absolutely no hurry to enter this new world (of online distribution) and if they can create a new distribution entity that looks a lot like those old distribution entities they would be very happy,” said Nail. “I suspect they are using Hulu as a ground to experiment with these different models.”

Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.

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