Why Hulu Doesn’t Have an Ad-Free Service Like Netflix — Yet

Hulu

Acting CEO Andy Forssell says company will spend $750 million infusion from Disney, Fox and NBC on content and marketing

Hulu at some point expects to introduce a subscription video plan without any advertising — and compete more aggressively with Netflix.

But today, the Internet TV service doesn’t want to leave money on the table. Hulu generates $7.99 monthly per subscriber for the pay service and brings in about that much — in the “mid to high” $7 range — in advertising per Hulu Plus user, according to Andy Forssell, Hulu’s acting CEO and senior VP of content.

Hulu Plus carries fewer ads than the content on Hulu.com (usually two 30-second spots per half-hour, versus three on the free site), but the ad revenue it gets from paying customers “allows us to buy more content,” said Forssell, speaking at the Goldman Sachs Communacopia conference in New York.

That said, “Allowing people to pay more and not have advertising at all, I think that’s the right path long term,” he added. “I’m a big believer in choice… I believe over time we should introduce an ad-free service.”

Hulu’s owners — Disney, 21st Century Fox and NBCUniversal — explored selling the Internet TV service earlier this year, attracting bids from parties including DirecTV, AT&T, Chernin Group and Yahoo. But in July, the media congloms announced they would retain their stakes in Hulu and invest $750 million in the company.

SEE ALSO: Hulu Pledges to Double Originals, Acquisitions

“What the $750 million lets us do is press down the accelerator and grow (the subscription business) faster, both through content and marketing,” Forssell said. “We want to get it to scale.”

In April, Hulu said the Hulu Plus service had hit 4 million subscribers. Currently, Hulu Plus is “midstream” in its path to profitability, Forssell said, while Hulu.com became profitable about 2½ years into its life.

Meanwhile, Hulu Plus should gain traction as TV broadcasters delay their newest episodes from becoming available on Hulu.com for several days after they air.

Since last fall Fox has delayed free online access to new eps for eight days after broadcast, making them available on Hulu Plus and through pay-TV partners next day after air. So far, NBC and ABC have continued to release shows on the Internet free day-after-air, but Forssell expects them eventually to follow Fox’s lead.

“I have no inside information. But I expect all the broadcast networks to institute a delay as they reach retrans deals (with pay TV operators),” he said. “The economics make that inevitable, but I couldn’t guess at the timing.”

As for original and exclusive content, Hulu looks for properties “where we can make the difference” to help showrunners find an audience, Forssell said. He cited the company’s recent deal with Lionsgate for comedy “Deadbeat,” to be produced by Dakota Pictures and Brad Pitt’s Plan B Entertainment.

“I can’t think of a situation where we’ve bid against someone” for an original series, Forssell said, noting that Netflix has vied with large cablers in some of its deals.

The Hulu Plus subscriber base skews younger than broadcast TV, with a median age of about 35 or 36, and they’re more affluent, according to Forssell. There’s an even 50-50 split between men and women, and females 18 to 35 are Hulu’s the fastest growing segment. Hulu users watch an average of about 20 hours video per month.

There’s no way Hulu could have gotten off the ground without being a joint venture, Forssell said — but he acknowledged that JVs are “by nature somewhat treacherous… different investors sometimes have different agendas.”

But, he said, both Disney and 21st Century Fox are “committed” to Hulu’s success. The third owner, NBCU, is forbidden from exercising operational decisions about Hulu under Comcast’s agreement with the U.S. government to acquire NBC.

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  1. whatever says:

    free hulu had adds, then you payed for hulu plus and no adds,,,,, now hulu plus has adds add they want to charge more for no adds?? Then what’s that hulu plus plus???

  2. Anonymous says:

    So what Hulu is saying is that you can buy a Hulu plus account for the same price as a Netflix account but we’ll still put Ads in your videos.

  3. We the viewers don’t mind an ad at the start of a video.
    We don’t mind ad borders outside the viewing area.
    WE DO MIND CONSTANT ADS DURING THE FILM OR SHOW. THIS IS WHY NETFLIX EXISTS AND WHY WE ARE LEAVING CABLE BEHIND.

    Why? Few things are more annoying than interrupting a tense scene with a 30 second ad about something you could care less about. It’s why video stores started in the first place…to get past that stuff.

    The bottom line: Commercials and ads promote piracy. People WILL do anything they can to get away from them.

    • mike says:

      bottom line is… you either pay for a subscription or you watch commercials. content actually costs money to create, something most viewers seem blind to… ads help pay for that content creation, if you are viewing content for free you have no right to complain about a few ads

  4. David says:

    The bottom line is TV ads are a gross interruption to viewing pleasure. There is so much good ad-free content to watch from a plethora of sources that I can’t budget my time to watch them all. Therefore, I will bypass Hulu until they recognize reality and adjust their business model.

    • lenny says:

      we understand, but we DO pay for a subscription. and i dont mind some ads. but hulu SATURATES you with ads. for a half hour shouw to have FIVE commercial breaks on on a streaming site is ridiculous. the funny part is they totally couldve gotten away with putting an ad here or there but predictably so they got greedy. netflix is proof that so many ads are unnecessary. so your arguement as to content costs money is invalid. ever hear of a little thing called podcasting, btw? yea, the age of being completely saturated with hours of ads every week is over and these companies need to recognize that or go by the wayside.

  5. Miguel says:

    I’m a current subscriber and I agree with all the ad comments, it’s ridiculous.

    Besides that why do I have to watch ads for a “Hulu Original”?! It’s enough to get it for major network shows but a show that’s directly from them…absurd.

    And the final thing that grinds my gears is that the grace period for skipping content is border line mental…if I watch even 10 seconds of a show and want to skip over beyond the ad Che joint I still have to watch ads…..stop being so greedy Hulu! Terminating my service!

    • mike says:

      greedy selfish and an idiot… that’s you buddy. you are complaining about watching a few commercials because you are paying $8 a month to watch all the movies and tv you can handle..are you F-ing kidding me? content is not magically created

  6. Yeah whatever says:

    I am thoroughly disgusted by Hulu +. I can not understand how a streaming service can indeed say that it offers show to it’s paid subscribers. Then when you click on the show it also wants you to log in to your cable provider to watch it. I wanted to cut my ties with cable but instead I see I am paying extra for hulu plus and is basically not useable with out your cable provider. Hulu should be forced to list what shows are free, what shows you get to watch when you pay for there streaming service Hulu plus and then Hulu should list ALL THE SHOWS THAT YOU STILL HAVE TO HAVE A CABLE PROVIDER IN ORDER TO WATCH!!!!!!!

    yeah hulu+ one less customer you will have to worry about.

  7. Leigh Smith says:

    I only signed up for Hulu+ to watch Once Upon A Time S4. Now that I have it I’d rather wait and buy the DVD set. 2-3 30 second commercials every 5 MINUTES!!!!! It’s beyond ridiculous. Doubtful I’ll get through this whole season before just canceling this and keeping Netflix. UGH!

  8. Suzi says:

    I joined Hulu Plus a couple months ago and I can’t believe the amount of commercials I am being forced to watch. Makes me sick. Going to cancel, it’s not worth it.

  9. jlegere says:

    As much as I love Hulu+ I cannot stand the commercials. 5 commercial breaks in a typical show with as many as 5 commercials per break. just so they can make a quarter. I would rather pay that quarter than watch the damn things.

  10. Aldo R. says:

    I used to be a Hulu+ subscriber but cancelled after getting tired of the commercials. Some of the annoying. I expect a commercial free feed if I pay for it, like Netflix.

  11. Jp says:

    They’re just greedy ass corporate pigs. All that bullshit is just smoke to cover up their greed. It makes no sense to pay for hulu+ and still be forced to watch dumbass commercials. I cancelled my hulu + the day after subscribing when I found out they had commercials for paid users. Ridiculous… Idk how they could expect to compete with netflix, or anyone else for that matter, with this dumb policy… Screw you hulu

    • MaryAnn says:

      AGREED

    • summoner2100 says:

      It’s a business. They HAVE to make money to be running. Commercials help do that. The minimal fees you pay as part of Hulu plus are nothing in relation to their costs. Know what you’re talking about before you comment about shit you obviously don’t know. Netflix are a different entity all together, and operate in a different fashion–also having NO free option.

      It’s not hurting you to watch 30-40 seconds of ads. I know. I used to use hulu plus a lot, only cancelled it due to other financial commitments. Change the ad preference to all play at the start if you’re concerned, and none play during the show.

      • lujk says:

        How do you change the ad preference like this? I can’t find the option and yes would really like to do that.

      • Sidewinder says:

        But Netflix costs the same per month as hulu and has comparable content (hulu has some content netflix doesn’t have and vice versa) and by some miracle netflix doesn’t have to show commercials to survive. Where do you get off saying that we should all just watch the commercials and deal with it? Thank goodness we have competition, huh? Now we don’t have to just deal with it. :)

  12. Mudd says:

    Before I cancelled Hulu+ there were way more than 2 slots of commercials per show. I can get that for free from the network sites, and it is not the same commercials over and over and over that Hulu+ has.

  13. Erick says:

    Greed gonna greed. There was a point in time when hulu+ had no commercials which is the primary benefit of purchasing a service like hulu. However grubbers gonna grub, as soon as they realized they could charge consumers money AND recieve ad revenue all bets were off.

  14. randy says:

    Hulu+ is getting really bad with the ads. During some shows its as if its network tv. Abc world news is 20 min long and has 10 30 second ads. Thats 5 mins of ads and 15 of show. Ridiculous. Stopping my service immediately after this.

  15. unimike says:

    Quit Hulu+ just like others, why am I paying $7.99 and still bombed with ads?

  16. Kauffman says:

    I’ve also left Hulu Plus. Can’t stand the ads … why am I paying for commercials?!

  17. 360sel says:

    Quit hulu today. Too many ads

  18. Hulu would have a ton more subs if they would get rid of the ads and I am one of them. I always sign up for the free month with they give it to me just to see if anything has changed but it never does. So until it is ad free I will not pay for it, period.

  19. Ed says:

    I watch Netflix because they do not have ads, thats why I subscribe. If i want to watch a barrage of ads, I’ll watch more of Fox News.

  20. Nicole says:

    The ads on Hulu Plus are ridiculous. I currently have a free month of Hulu Plus but solely based on the ads alone we will be cancelling the subscription. Netflix is much more enjoyable anyways and they have a wider selection.

  21. Jake says:

    I question the claim that “Hulu Plus carries fewer ads than the content on Hulu.com (usually two 30-second spots per half-hour, versus three on the free site).” I subscribed to Hulu Plus for nearly a year before canceling. I canceled because the ads were getting out of control. Watching via TiVo, I typically saw 8-12 ads for every half hour. The claimed “limited commercial interruption” was a lie, with almost as many ads as were seen on broadcast programs. If it were 1-2 ads/ half hour, I would still be a subscriber.

    Now I’m more than happy with Netflix. I have convinced several friends to eschew Hulu Plus for the much better value offered by Netflix.

  22. Jill Lewis says:

    I watched a show from the BBC on Hulu, trying out the Hulu Plus service, and there were commercials about every 6 minutes!! I’d love to know how to get it down to 2 commercials per half hour.

    • Andy says:

      I was just going to say the same. That Hulu spokesperson had to have been high. At the time this article was written, I’d get four, yes FOUR 120 second commercial breaks for a half hour show with my paid subscription. They offered me 5 months of free service when I left. I didn’t take it. It’s sink or swim time and they know it. Giving false PR info doesn’t help them at all. They’re probably just hoping somebody subscribes, finds out Hulu and Hulu plus are the same, and forgets about their subscriptions. And as far as their episodes go, You can’t get half of them. If you want to watch a show from the beginning, they make it impossible. Yea, keep telling yourself you’re gonna survive, Hulu. I really doubt it.

  23. HuluPlus really sucks as far as playing adds since these are annoying adds that play when you least expect them when watching a TV show as it cuts the programing since they get thrown in the middle of an actor’s sentence. I am a 7 day subscriber cause I got something free in return so I had to try the service for 7 free days but after or even before paying for a darn subscription I will cancel just like I did the last time.
    I will definitely stick with my NetFlix for life as I am satisfy that their service since is super way much better as they are not greedy as HULU to be freaking adding advertisements that upsets a customer as you will not ever listen to these adds (crap).
    Just saying….

  24. Tim says:

    “usually two 30-second spots per half-hour, versus three on the free site”
    I want to know what service this guy is seeing. I have Hulu Plus, but still have to sit through 60-90 seconds of ads 2-3 times for every half hour show, and 4-6 times for every hour show. On top of that, it’s often the same ads every break which is even more annoying than the annoyance of already having to see ads.

  25. I vstill haven’t found a telephone number to complain about the removing of the “Cleveland Show”. Please email me a number to call when i am not happy because Netflix has one .

  26. I’m willing to pay a little more for hulu plus ad free, in my opinion they have great shows and a lot of options for all the family. But I hate seeing 1/3 ads, ads are a waste of time.
    I want to watch without interruptions.

  27. erich v says:

    I don’t mind the ads as they’re short but I’d gladly pay a little extra if I could get some if the networks’ programming they don’t show like CBS, AMC, SyFy to name a few.

  28. kingck says:

    Hulu plus’s biggest mistake is the ads i pay for amazon prime (shit for content btw) and netflix because there ad free streaming services. i wont watch tv because of ads. when im watching a show i wana watch start to finish and no interruptions and i would consider hulu plus if they did ad-free service nearly 60-80% of hulu plus content is on netflix ad free or can be streamed else were with out ads

  29. arbpen says:

    I actually like the commercials on Hulu Plus. Shorter than broadcast television, they still allow me time to do other things, like get a snack, put a dirty dish in the sink, or some personal private time. Yes, I know I can pause Netflix, but I like knowing that in a few minutes, I can take a break.

    Netflix also seems to have issues with content coming in without pixelating. This may be because not enough bytes have streamed in yet, but Hulu plus always seems to have a better “picture” than Netflix.

    I pay for and like both services. We also have digital antenna television, and use Hoopla to stream digital content from the library. My son, age 10, is an avid Netflix user, where I tend to stay with Hulu Plus.

  30. jim bailey says:

    hulus biggest problem after the ads which i will not pay to see ads, is the freezing and operational problems they have and their solutions requiring you to reconfigure your equipment, i dont think they will ever approach the quality of netflix, their video is awsome and it works.

  31. Jo Leyva says:

    Why can’t we see past seasons of Rookie Blue on Hulu only current season?

  32. jitiro says:

    Hulu needs to get this straight: I WILL NOT PAY (YOU) TO WATCH (YOUR) ADS.

    Hulu dragging its feet on a paid-for ad-free service is a huge mistake, as they are leaving (my) money on the table month after month, AND the longer they wait, the more likely they’ll find themselves presenting content that can be obtained (ad-free) from Amazon Prime Instant Video or Netflix Watch Instantly, making their eventual offering redundant.

  33. J.L. Kendrick says:

    There used to be three benefits to watching Hulu/Hulu Plus: 1. fewer commercials per episode(and sometimes commercial-free episodes, if you agreed to watch a 1-2 minute ad up front); 2. the ability to watch popular TV shows when I had the time; and 3. new show were available less than 24 hours after air. Now, they’re instituting a policy of showing some popular shows on a 1 month delay, and showing almost as many commercial as regular TV (on avg 6 commercial breaks with 3 ads each, per 44 minute episode). However the freedom to watch when I want remains. With that said, I still prefer watching programs on Hulu Plus and Netflix over traditional TV. But like all good things in the hands of the television network idiots, Hulu will continue to get more and more in line with traditional TV until all of the benefits are gone. And I’ll cancel my subscription.

    Yeah, sg8 says were suckers. But whats $7.99? The real suckers, people who pay DirecTV and COMCAST over $100/mo for programs I watch for $8. But then again, $8 may be a life changing amount of money to sg8.

    • Jeff in MN says:

      Kendrick – I wouldn’t go as far as to say the 90+% of people with satellite or cable TV are suckers. Can Hulu Plus show my regional sports channel and Sports Center? Does it have Disney and Nick programming for my kids? Does it have FX, USA, TNT, TBS, AMC and other programming? Last I saw, I couldn’t even watch CBS’s Amazing Race on Hulu Plus.

  34. sg8 says:

    Hulu subscribers are real suckers. I tried a trial and still saw ads. No deal.

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