Hulu’s ad-free tier hasn’t hurt its advertising business, explained the company’s CEO Mike Hopkins on stage at Recode’s Code Media conference in Southern California on Thursday. Instead, Hulu has actually seen its ad business grow 30 percent since launching the ad-free option in September of 2015, Hopkins said.
Hopkins went on to argue that having the ad-free option has helped the company to grow its user base: “There are ad-avoiders and ad-accepters,” he said, adding that ad-avoiders previously also steered clear of Hulu altogether. Now, these users are subscribing: “They wouldn’t have come to Hulu if we didn’t offer a plan like this.”
Still, ad-avoiders are in the minority. “The vast majority of subscribers are choosing the commercial plan.” That’s why Hulu’s owners, which include Disney, News Corp. and Comcast, aren’t too afraid of the ad-free tier, argued Hopkins. “I don’t think we do anything that competes with the core product” of TV networks, he said.
Hopkins also said that Hulu may be building out its subscription business with additional add-on packages. The company started to resell Showtime’s online service to its customers last June. “We will likely add others,” Hopkins said Thursday. However, he rejected the idea that the company is trying to re-create the cable bundle over the Internet with these kinds of add-on options. “It’s not a bundle, it’s (more like) a store,” he said.
Hopkins declined to comment on the company’s plans for an international expansion, and instead said that the company is currently focused on its U.S. business. A question about Time Warner’s reported interest in buying a stake in Hulu also was left unanswered, with Hopkins instead pointing out that Time Warner is already a licensing partner: “We like Time Warner. We have a great operating relationship with them.”