Hulu CEO: 60% of Hulu Customers Pay for Ad-Supported Plan, Will Start Promoting The Ad-Free Tier
Earlier this month, Hulu revealed that they now have 26.8 million paid subscribers, up from 23 million they announced at the end of the year. While many assumed that more customers subscribed to their Limited Commercials plan, there wasn’t clarity on the exact split. On the Recode Media Podcast with Peter Kafka, Hulu CEO Randy Freer shared that “about 60% still come on board for the ads service.” But, the streaming service also see customers jumping between products — like ad-supported, ad-free, and their Hulu Live TV service, throughout the year.
Freer said that this is despite the fact that ads used to be one of the top three complaints of the service. The company has never promoted the ad-free product ($11.99), because they “needed the economics associated with a dual revenue stream in subscription and ad revenue.” But, they expect that to change this year, now they feel they can grow even faster by promoting the ad-free product to customers who truly don’t want ads.
Hulu has also tried to improve the product for those on the Limited Commercials tier ($5.99), by limiting ad pods to just 90 seconds, and setting frequency levels on an hourly and daily basis. Freer thinks that with these changes they will have the “best customer experience for ads, at a price that will ultimately people will be ok with.”
The company, which lost over $1 billion this past year, expects that 2019 will be the apex of losses. Last week, Disney announced that they had reached a deal with Comcast to take full control of the streaming service — by agreeing to buy their stake at a $27 billion valuation in 2023. Just last month, AT&T sold their 9.5% stake in Hulu back to the company at a $15 billion valuation.