Pen15, Handmaid's Tale, Shrill, Castle Rock, Letterkenny, Ramy, Dollface, High Fidelity $5.99 | $11.99 (fewer ads) | $49.99 for liveīattlestar Galactica reboot, Saved by the Bell revival, Punky Brewster revival, MacGruber With price increases pushing Hulu toward subscriber losses and ad revenue faltering, the service’s value to Disney is diminishing at a time the company can. Unfortunately, the increase in ad views won’t compensate for the loss in subscription revenue due to the price decrease. The change will increase the number of subscribers watching ads. Hulu decreased the price of its basic plan by $2 a month and increased ad-free viewing by $2. Given that Hulu is running at a huge loss, the price changes may serve only to aggravate the problem. However, nScreenMedia estimates Hulu will generate less revenue in 2019 than if they had left basic pricing alone. Hulu is betting that the increase in advertising revenue will make up the difference. It is doubtful that a $2 a month price decrease in the basic plan will boost the growth rate enough to cover the lost subscription revenue due to the increase. What does it mean for Hulu revenue overall? For example, Hulu Live with Hulu and no ads can save $6 a month (more than 10%) by agreeing to watch ads. Further, some existing subscribers may drop the ad-free option. With such a big difference in price between ad-free and ad-loaded viewing, more new subscribers will opt to subscribe to the basic Hulu tier with ads. The price adjustments should reverse the decline in the importance of ad revenue to Hulu. In other words, a lot of Hulu subscribers have been opting to watch ad-free. Fast forward to 2018 and ads delivered 36% of revenue versus 64% from subscriptions. In 2014, nScreenMedia estimated that 59% of Hulu’s revenue came from ads and 41% from subscriptions. The price for ad-free viewing must have seemed cheap to many Hulu customers too. When Hulu introduced the ad-free option in 2015 nScreenMedia suggested that $4 a month might not be enough to cover the loss in ad revenue. A $1 price difference with Netflix might have been enough to sustain or increase Hulu’s growth rate. Hulu might have been better off leaving the basic plan price the same. At price parity with Netflix, Hulu experienced its fastest subscriber growth ever. However, Netflix announced it would raise the cost of its entry-level tier $1 a few days before Hulu announced it would lower the price of Hulu basic. In other words, the Hulu subscriber acquisition rate more than doubled between 20.įor all of 2018, Hulu’s basic service and Netflix’s entry-level tier were the same prices: $7.99 a month. It gained another 5 million in under half that time between April and December 2018. Hulu gained 5 million subscribers over the 20 months between April 2016 and the end of 2017. Looking at 2018 subscriber growth and other market conditions suggest Hulu didn’t need to cut the price of its basic service. The pricing changes seemed to be designed to do two things: continue strong subscriber growth and boost the growth in advertising revenue. Hulu boosted the cost of ad-free viewing $2 a month, to $6, keeping the total cost of ad-free Hulu at $11.99 per month. However, for those subscribers that have opted for ad-free viewing, the monthly subscription cost has not changed. While subscribers to the company’s vMVPD Live service received a hefty increase of $5 per month, basic subscribers received an unexpected decrease of $2 a month, to $5.99. In January, Hulu adjusted pricing for all its subscription streaming services. Unfortunately, the price cut was unnecessary and may also increase losses in 2019. Hulu’s price changes seem to be designed to boost the number of basic subscribers watching ads. 11 Feb, 2019 Colin Dixon 0 Comments AVOD, Hulu
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