In the battle of the streaming services, the rivalry between Hulu and Netflix is arguably the one we hear about most often. In a New York Times story, we learned just how Hulu is holding its place as the top Netflix competitor. The answer is ads.
According to the article, the $6/month, ad supported version of the streaming service is the most lucrative plan for Hulu. The article says:
Even though it charges $6, the service generates more than $15 in revenue per subscriber each month, because of the high-cost advertising sold against those customers, according to two people familiar with the business.
With a lot of talk surrounding the $2 Netflix price increase announced in January, Hulu drew in even more subscribers by cutting the cost of their ad supported plan. Even the majority of subscribers who weren’t happy with the recent rise in cost of the Hulu with Live TV option went to the ad supported version.
Hulu has worked to ensure that viewers are still on board with the ad program by keeping the cost of the service low and capping ad breaks at 90 seconds. Hulu’s chief executive Randy Freer said “Hulu does this with a viewer-first ad experience that has less commercial interruption, with ad breaks that are shorter and ads that are more relevant.”
Hulu made over $1.5 billion in ad revenue last year.
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