Hulu is pitting itself against Amazon Prime and Netflix with a new, ad-free tier.
For $11.99 a month, users can watch the streaming service’s slate of shows without having to sit through ads, the company announced today. The new option is $4 more a month than its existing pay tier, formerly known as Hulu Plus, that has limited commercials. It also will continue to offer a free, ad-supported version that provides limited access to its library.
Hulu is jointly owned by NBCUniversal, Disney and 21st Century Fox, which owns broadcast networks that bank on ads shown on its networks to make money. Hulu’s library includes the entire “Seinfeld” catalog, dozens of cable programs, original programs like Fox reject “The Mindy Project” and episodes that are usually added the day after airing on television.
The steep price increase between the existing $7.99 tier and the new $11.99 option is intended to induce Hulu’s nine million subscribers to “keep the version they have, and not hasten the erosion of the ad model,” Recode reported.
There’s one major caveat, however. Seven shows will have a 15-second ad at the beginning and a 30-second at the end, but none during the program. They are five ABC shows (“Scandal,” “How to Get Away With Murder,” “Agents of Shield,” “Grey’s Anatomy,” “Once Upon a Time,”), Fox’s “New Girl,” and NBC’s “Grimm.”
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So if Hulu CEO Mike Hopkins expects that a “solid majority” of subscribers will keep paying for the limited commercial tier, why introduce an ad-free model? Competition and demand.
After adding Seinfeld to its library in June, Hulu noticed people complaining about the ads making their viewing experience annoying, according to The New York Times. Hopkins hopes the new tier will appeal to Netflix and Amazon Prime users, too.
“You can split people into two categories: ad avoiders and ad acceptors,” Hopkins told the Times. “There are clearly people who just are not going to buy Hulu because there are ads. We think we can bring them back into the fold with new content and this new choice.”
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Image courtesy of Hulu.
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