Hulu Adds (Mostly) Ad-Free Subscription Service

Scandal ABC Ratings

'Scandal,' 'New Girl' among exceptions that will still carry pre-roll advertising

Hulu launched an alternative subscription service Wednesday sans commercials in the programming–but with some notable exceptions.

The new offering costs $12 per month, four dollars more than the existing Hulu service, which will remain available. However, seven prominent broadcast TV series including ABC’s “Scandal” and Fox’s “New Girl” will still be preceded by a 15-second preroll ad and followed by a 30-second post-roll ad.

Hulu CEO Mike Hopkins chalked up the exceptions to rights held by studios on select series. “They have other commitments that they couldn’t free them up for a complete commercial-free offering,” he said, adding that the service will clearly delineate the exceptions to users before they stream those series.

Other series that will have pre-roll include four ABC series: “How to Get Away with Murder,” “Grey’s Anatomy,” “Once Upon a Time,” “Agents of SHIELD,” and an NBC series, “Grimm.”

Hulu is making the move in response to subscriber complaints voiced in various forms of consumer research about having to pay yet still watch ads. Earlier this month, a Parks Associates survey found that half of Hulu subscribers have canceled service over the past 12 months, compared to just 9% for Netflix over the same span.

The new subscription option brings Hulu in line with its commercial-free rivals Netflix, which remains several dollars cheaper than Hulu depending on which rate its own subscribers pay, and Amazon Prime, which charges $99 per year for access to its content library in addition to free two-day shipping.

Hulu last reported 9 million subscribers earlier this year, a far cry from the 42.3 million Netflix has in the U.S. alone. Hopkins explained that by making a version available for so-called “ad avoiders” while keeping a cheaper option in place, Hulu can accelerate its footprint. “There will be a little bit of switching at the beginning but I think both plans are going to grow dramatically,” he said, adding that Hulu had no plans to eventually exit the ad-supported business.

A new marketing campaign for Hulu is launching in tandem with the new service that will highlight the new option. Existing subscribers can opt in to the commercial-free service at the new rate. A third, free version of Hulu, which doesn’t have nearly as deep a content menu as the paid options, will remain as well with commercials.

The launch of the new service was not unexpected, with rumblings of an ad-free strategy circulating earlier this summer. Earlier this week, Hulu also announced a deal to land movies from Epix.

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  1. So, Hulu now charges $12 to let users view Hulu the way they initially did for free?

    In other words, an ad at the beginning and one at the end was how they used to show ads in their free service. Now you pay for it.

    They reluctantly moved to an “ad-free” model, but gave users a middle finger by charging more than the competition and kept ads on the network shows.

    So much for meeting folks halfway.

  2. nerdrage says:

    It’s ad-free except it’s not. Oh and it’s more expensive than Netflix. FAIL.

  3. Jacques Strappe says:

    This is just the beginning of shifts in the streaming business model. Sooner rather than later, Netflix and Amazon will most likely be adding an option which will include commercials and raise their commercial-free plan price. As the price to purchase existing programming escalates and the price to air original programming content soars, these streaming services will have to raise prices often or cease to exist.

    • nerdrage says:

      If Netflix and Amazon want to cut their throats, they’ll add ads to their existing plans.

      Smarter movie: a lower-cost or even free tier, supported by ads. Makes the most sense for Amazon.

      • nerdrage says:

        Oh I forgot, the way for them to control costs is what Netflix is doing: aggressive global expansion. They can sell the same expensive Hollywood content across a larger and larger audience, amortizing the costs to keep per-subscription prices down to avoid defections. And the larger they get, the more clout they have in bargaining licensing fees with Hoilywood. It will get to a point where, if you want to make money off your content, you need a streaming partner, and then maybe Hollywood won’t be so greedy anymore…also, with the sheer volume of production, supply is already exceeding demand.

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