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How Is Hulu Meeting Rising Competition in the Streaming Industry?

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Apr. 29 2016, Updated 11:06 a.m. ET

Hulu’s expanding movie catalogue

As competition in the video streaming market heats up, with new entrants including pay-TV operators offering their own OTT (over-the-top) services, pure-play OTT operators such as 21st Century Fox’s (FOXA) Hulu are rising to the challenge.

Late in April 2016, Mashable reported that Hulu, which is jointly owned by 21st Century Fox, Comcast’s NBCUniversal (CMCSA), and the Walt Disney Company (DIS), had 3,800 movies in its film catalogue as of late March.

The report also cited AllFlicks data stating that Netflix’s (NFLX) catalogue of movies in the United States had fallen by about 33% in the past two years to around 4,300 films.

In contrast, the report stated that Hulu had been adding around 50–100 movie titles per month, while Amazon had been adding around 25–50 movies to its movie library per month. According to the report, for Hulu, most movie titles were added after its deal with Epix in 2015.

Early in April 2016, Hulu became available to Cablevision customers in New York as a pay-TV channel through Cablevision Systems’ (CVC) Optimum set-top boxes.

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Hulu’s bid to rise to the challenge of increasing competition

Last year, Hulu started offering an ad-free option plan for its users at $11.99 per month in addition to its existing $7.99 per month service. However, FOXA has observed that many of Hulu’s $7.99-per-month subscribers haven’t switched to the ad-free plan.

Currently, FOXA is focusing on Hulu’s subscriber growth in the United States. As the above graph indicates, Hulu offers a basic ad-supported subscription plan for $7.99 per month. It remains to be seen how well Hulu’s ad-free premium plan, priced at $11.99 per month, will be received, since Netflix’s ad-free subscription plans average $10 per month.

FOXA is also experimenting with a reduction in its advertising load for Hulu, its OTT platform using TrueX technology. It’s been observed that 80% of Hulu viewers choose to engage with ads for 45 seconds before the start of a show.

FOXA makes up 0.66% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ has 4.2% exposure to the television sector.

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