Hulu Slashes Entry-Level Price 25%

3 Oct, 2016 By: Erik Gruenwedel

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$5.99 monthly ad-supported fee for new subscribers only lasts one year

Hulu has quietly cut the monthly subscription price for new members 25% to $5.99, from $7.99, for a limited time. Available with a free seven-day trial, the promotional plan is for ad-supported content only and reverts back to $7.99 monthly after one year.

Co-owned by Disney, Fox, Comcast and Time Warner, Santa Monica, Calif.-based Hulu boasts more than 12 million subs, but reportedly has experienced slowing sub growth this year. The $5.99 promotion undercuts rivals Amazon Prime Video and Netflix, but does not affect the $11.99 ad-free tier plan.

Hulu early next year is slated to launch an online TV service, reportedly priced around $35 monthly. Despite the higher price, the service would target market leaders Sling TV, PlayStation Vue and Charter Spectrum TV Plus, among others.

Time Warner recently acquired a 10% stake in Hulu, principally for the online TV platform. Yet, despite major media backing, the online TV service remains a question mark to some analysts, who question the service’s price and content selection.

“The ramifications of success could have an effect that goes far beyond just Hulu's partners, from MVPDs to cable networks to Netflix. A failed Hulu virtual MVPD could dispel the idea of widespread competition for incumbent bundles from virtual bundled competitors,” Brandon Ross, analyst with BTIG Research, wrote in a note reported by . “We are skeptical that the Hulu bundle will meaningfully impact the MVPD landscape from a subscriber standpoint. We simply wonder whether the price/value will be strong enough to attract customers.”

Indeed, NBC Universal CEO Steven Burke (whose parent company is Comcast) surprised some observers last month when he questioned online TV compared to the traditional linear channel bundle.

“If you’re a consumer that gets 200 channels, I’m not sure why huge numbers of people are going to run out and get excited about paying $45 for 25 channels. From a consumer point of view, it doesn’t make sense,” Burke told attendees Sept. 14 at Bank of America Merrill Lynch investor brokers conference in Los Angeles.

To analyst Ross, Burke’s comment undermined online TV.

“Burke essentially saying Hulu MVPD is DOA — calls OTT bundles challenged and will be surprised if [they] generate huge numbers out of the gate,” Ross .

 

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