Hulu is going to become ad free. The streaming network is introducing a new subscription tier that shares its library of content advertisement free for $11.99 a month.
According to The Hollywood Reporter, this will be the first time that Hulu will offer their services without ads. When the website first launched it was free but, featured dozens of ads in 2008, and then the following year the company introduced a subscription service called hulu Plus, which included “limited” ads.
But CEO Mike Hopkins argues that consumers asked for an ad-free way to watch its videos for years. “There was a segment of custumers that said, ‘look if you had a commercial-free option, we’d be willing to pay more for it and we’d be happier with the plans,’ ” says Hopkins.
Hulu will now have three options for customers. The free service, the standard $7.99 service, and a $11.99 a month ad-free subscription.
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Hopkins says that the two subscription offerings will be identical except for the presence of ads. Hulu has spent the better part of the last year clearing the rights for the ad-free offering and only seven shows — including Scandal, Grey’s Anatomy and Once Upon a Time — will include short pre-roll and post-roll ads. “We’re going to try to really have the differentiation only be the advertising,” he adds. “We think it’s important that the plans are the same except for that. I guess I would never completely rule out [additional offerings] but at the moment the goal is to keep the plans the same.”
But, why $11.99? Well Hulu researched the price point to find the highest number people are willing to pay for no commercials. But the higher price means that an ad-free Hulu will cost more than Netflix’s $7.99, Amazon’s $99 a year, and Showtime’s $10.99.
Hulu currently has 9 million paid U.S. subscribers, a much smaller number than the 42 million subscribers that Netflix reported in July. But, the move to go ad-free will help Hulu to compete with Netflix and compete in the streaming market.
