Hulu weighs ad- free service option
The new tier will begin as early as this fall and will cost $ 12 to $ 14, sources say.
Hulu, the video streaming service on a charge to raise its clout, is considering adding a commercial- free tier to its service.
The Santa Monica company currently offers a paid subscription at $ 7.99 a month that gives subscribers access to a wider range of content with commercials.
Now Hulu is eyeing a second, ad- free option that would launch as early as this fall and be in the price range of $ 12 to $ 14, according to people with knowledge of the plan who were unauthorized to speak publicly.
Hulu had no comment on the development.
Such a move could be the biggest marker of Hulu’s in- tensive effort to raise its prof ile to better compete with already ad- free rivals Netflix and Amazon Prime.
In addition to ramping up its slate of original programming, Hulu has aggressively landed big- name deals in the last few months — nabbing the streaming rights to “Seinfeld,” picking up Mindy Kaling’s comedy when Fox passed, and striking a deal with Showtime that would give subscribers access to the premium channel’s content at an additional cost.
The ad- free initiative, which was f irst reported by the Wall Street Journal, shows the evolution of Hulu. The service started out free in 2007 and has gradually changed over time after changes in management, as well as recognition that consumers are willing to pay for quality programming.
“They are looking for growth,” said Needham & Co. media analyst Laura Martin. “If they want to up their subscriber base, they have to look at what may be hurting them.”
The service, which is owned in part by Disney, 21st Century Fox and Comcast, has nearly 9 million subscribers — a number that is dwarfed by Netf lix’s sturdy 42.3 million domestic subscriber base. And many have wondered whether Hulu’s embrace of commercials has stunted its growth.
The streaming service, thus far, has relied on ad revenue to help pay for the cost of expensive programming such as “Seinfeld.” For current shows that are available to stream on Hulu the day after airing, the streaming service splits the ad revenue with the TV networks that supply the shows.
The Hulu ad- free price is higher than what Netf lix and other streaming services charge. But as Hulu becomes more aggressive about taking on other streaming services, responding to consumer pref- erences was inevitable.
And its ad load has long been a complaint among some users. Hulu, for its part, has been vocal for years about toying with the idea.
Martin, the Needham & Co analyst, said the higher price would allow the market to see how much consumers are willing to pay for an ad- free experience.
“Consumers say they hate ads, but are they really willing to pay extra to avoid them or are they just whining? Business will have some data to f igure it out,” she said.
yvonne. villarreal @ latimes. com