Hulu’s subscriber growth has been robust
Like its competitor Netflix (NFLX), streaming service Hulu burnt cash to build upon its already huge content library last year. Hulu had over 25 million subscribers as of the end of 2018, a robust increase of 47% from the previous year. It had 17 million subscribers at the end of 2017.
According to Hulu, it made $1.5 billion in ad revenue alone in 2018, a 45% increase from 2017. However, its heavy investment in content meant that it wasn’t profitable last year.
Just after Netflix announced that it was hiking rates across plans in the United States, Hulu said that it was slashing rates on its cheapest ad-supported plan while increasing the rates on its most expensive live TV streaming plan.
eMarketer predicts that Hulu’s ad revenue will see robust growth
Citing the Interactive Advertising Bureau, eMarketer noted that 56% of US video viewers don’t mind seeing ads if they’re paying a reduced fee.
According to eMarketer’s estimates, Hulu’s decision to cut the price on its cheapest plan will bring in more subscribers along with more ad revenue. The research house expects that Hulu’s gross US ad revenue will cross $2.2 billion in 2020, up 22.7% from 2019.
The Walt Disney Company (DIS) recently announced that it would be legally completing its acquisition of 21st Century Fox’s assets on March 20, following which it would have a 60% stake in Hulu. Disney might have to pay a premium if it wants to acquire the rest of Hulu from Comcast (CMCSA) and AT&T’s (T) Time Warner.