Hulu Business Model – How does Hulu Make Money

No matter what, people are always up for entertainment, right? Exactly, this is why the premium video streaming services such as Netflix, Hulu and Amazon Prime Video are just seeing nothing but success.

Thanks to technology, these entertainment platforms are bringing entertainment to your fingertips replacing the cable TVs though. You can watch live TV, your favorite web series, movies etc on your phone, tablet or laptop anywhere, either at home, office or on-the-go.

Thus the main reason for their success is they are just entertaining their customers no matter where they are. Moreover, the members can access a wide range video content on these platforms for lesser pricing.

Wondering how these video streaming services make money while they are offering a wide range of content for a lesser price than that of your cable costs? Well, let’s talk about Hulu here in this article and the others later.

Read: Netflix Business Model here

This article covers what Hulu is, how does it work and explains its business model. So, keep reading…

What is Hulu?

Hulu is an American subscription video streaming service owned by Walt Disney Company. It was, in 2006, it initially started as a joint venture between NBC Universal, News Corporation, The Walt Disney Company and Providence Equity Partners.

Also, Hulu is partnered with top USA’ cable TV channels such as NBC, Fox, ABC, CNBC, Disney Channel, National Geographic, etc to grow as a leading online TV library.

Hulu is the nearer competitor to Netflix boasting over 35.5 million of subscribers as of August 2020. Though it started as a replacement for cable TV by making the TV content available for users 1 day after it is aired. In 2011, Hulu started producing original content. The Morning After, a light hearted pop-culture news show was its first release.

You will be surprised to know that Hulu was first announced with no content in it. It asked users to leave their email address for beta testing. It was in March, 2008 Hulu started streaming shows and advertisements.

Now, Hulu is a giant streaming library of 80,000+ TV episodes and movies, also offering Live TV with 65+ top channels starting from $5.99 to $54.99/month.

Okay, now that you have seen what Hulu is. Let’s see how it makes money.

How does Hulu Make Money?

Hulu makes money in two simple ways. In fact, its business model is pretty easy to understand. Let’s see how it does.

  1. Paid subscriptions
  2. Advertisements

However, back then, Hulu allowed users to stream TV shows with ads interrupting in between. It was almost similar to the business model of YouTube and it is clear that it hadn’t made any profits. Hulu growed its ad revenue by 45% making $1.5 billion from  2017 to 2018.

In 2010, it started Hulu Plus, a paid subscription service similar to Netflix. Initially, Hulu Plus was available for $9.99/month. Very soon it devalued its pricing to $7.99/month. Though the paid subscription service contains a huge library of shows, movies etc, it also contains ads.

It launched a no-ad subscription plan for around $12 to $14/month. This plan is now available for $11.99/month. Again, it was not fully ad-free service. Hulu airs pre-roll and post-roll ads during a few shows.

Later in 2017, Hulu focussed on strengthening itself as an online TV. It launched Live TV service by live streaming more than 50 broadcast and cable tv channels. It introduced HBO, Showtime, Cinemax, cloud DVR to online live streaming add ons.

Hulu’s Major Highlights

  • Hulu is one of the largest library for on-demand TV shows, movies and original content
  • Hulu streams Live TV for more than 200 channels
  • It provides cloud DVR
  • It produced popular originals like The Looming Tower, The Handmaid’s Tale, The Simpsons etc
  • Hulu provides access to on-demand channels like HBO, Cinemax, SHOWTIME, STARZ and exclusives like Games of Thrones.

How to Get Hulu Subscription?

It is quite easy for users to enjoy streaming on Hulu. All you need to do is sign up for the app, choose a plan among three (Hulu, Hulu No Ads, Hulu + Live TV) and enjoy the free trial. You can enjoy 30 days of free trial for Hulu and Hulu (No Ads) whereas you can use Hulu + Live TV for only 7 days. You can pay for the actual plan after the trial period ends or cancel the plan any time.

There are no hidden fees, equipment rentals, or installation appointments and the pricing is pretty straightforward. It subscription model is as follows:

Hulu: $5.99/month

Features

1. Streaming library of 80,000+ TV episodes and movies

2. Most new episodes the day after they air

3. Access to award-winning Hulu Originals

4. Watch from anywhere and any device

5. Watch on 2 different screens at the same time

6. Up to 6 user profiles

7. 30 day-free trial

Hulu (No Ads): $11.99/month

Features

1. Offers all features of Hulu

2. No ads in streaming library

3. Download and watch

Hulu  Live TV: $54.99/month

Features

1. Offers all features of Hulu

2. Live TV with 65+ top channels. No cable is required

3. Live TV guide to navigate channels

4. Record Live TV with 50 hours of Cloud DVR storage

5. It offers 7 day free trial

Add-ons are available at extra cost. You can always add them any time.

How does it Make Money from Subscriptions?

Hulu has more than 35.5 millions by August, 2020. It has revenue of $1 as per 2013. The paid subscribers are still growing due to its various plans such as live TV, no-interruption and both combined. Moreover, users can add more add-ons by paying extra.

Prices for Add-ons

  • Hulu Live TV – add Enhanced DVR (200 hours) – $9.99
  • Hulu Live TV – add unlimited streams – $9.99
  • Hulu Live TV – add unlimited streams and enhanced DVR – $14.99
  • Showtime on Hulu – $10.99
  • HBO on Hulu – $14.99
  • Cinemax on Hulu – $9.99
  • STARZ on Hulu – $8.99
  • Entertainment add-on – $7.99

How does it Make Money from Advertisements?

Hulu provides three types of advertising options.

Action with Broad Appeal

This is to reach a wider audience with customized content. Here advertisers can target audiences on Hulu based on interests & behaviors, demographics, location, and custom audiences.

Brands can sponsor hottest content or integrate with custom content or choose innovative ad formats.

Premium Programmatic

Advertisers can power the campaigns by activating the data with this ad option.

They can select the target audience, determine price bid and control and optimize the campaign in real time.

This is how Ad Premium Programmatic plan works.

It matches the audience, finds lookalike audience and analyzes behavioral segments.

Also, Hulu offers three types of ad options.

1. Programmatic Guaranteed: Automated, guaranteed buy with the help of advanced targeting

2. Private Marketplace: Buying not guaranteed with targeted control

3. Invite-Only Auction: Lets you find your audience, set your price and optimize.

Thus advertisers can choose the plan according to their goal.

Self-Service Solution

This ad plan is for small businesses to upload, target and track performance of their ad campaigns. Hulu provides tools for ad managers to boost their ad performance and their brand awareness.

Hulu ad manager is still in beta version. Its creative partners, Genero, QuickFrame, Vidmob and Shuttlerock help the advertisers to create innovative ads that attract audience attention.

Hulu provides 7-second ad options and 30-second ad options. For, basic subscription model, Hulu plays ads over and over. Whereas for premium plans, non-blockable ads are streamed before and after the videos.

Is the Business Model of Hulu Sustainable?

Though people compare Hulu and Netflix, it actually is a supplement for cable TV and a replaceable for YouTube TV. However, it doesn’t mean Hulu is not a competition for Netflix. In fact, Hulu streams shows such as Futurama, The Simpsons etc which are not available in any other premium streaming services like Netflix.

Hulu is a large streaming library with a vast number of TV shows, original content, live TV channels and web series, the only concern is viewers cannot skip ads. This is definitely a disruption for its members while watching their favorite content.

In fact, Hulu is strict in terms of revenue. Hence, it is clear that it makes profits with its business model. Hulu makes most of its revenue from advertisements. Moreover, it constantly upgrades its tools, provides better insights for brands to grow their business. Not just that Hulu provides impactful market insights for advertisers and helps viewers connect socially with viral challenges, and help marketers with case studies. Thus Hulu’s business model is sustainable in the long run.

Bottom Line

So, this is how one of the leading on-demand streaming services, Hulu makes money. As you see its business model is quite simple. It makes money through advertisements, subscriptions and add-ons. Moreover, it is affordable than other premium subscription services. A lot of changes were made to its business model and hence the changes occurred to its revenue. Though it doesn’t make as much as Netflix makes, it is still making a good profit through its business model. Moreover, Hulu’s ad revenue was expected to grow by 22.7% by 2020.

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