Majority of Hulu Subscribers Opt For the Ad-Supported Plan

Hulu, which recently revealed that it has 28 million customer accounts, has provided additional details on its subscribers. The streaming video service offers an ad-free $11.99 per month tier, but the majority of its users pay $5.99 per month for the ad-supported plan. Hulu claims 82 million total viewers (2.9 viewers per account), of which 70 percent pay for the ad-supported plan. The company generated nearly $1.5 billion in ad revenue last year. Since advertising is vital to keeping its subscribers, Hulu strives to present ads via viewer-friendly models.

“We have to restrain ourselves. You can’t just jam ads because you need to make a number,” explained Hulu SVP and head of advertising sales Peter Naylor at VideoNuze’s Video Advertising Summit in New York City last week. “We want to have an experience for viewers that is consistent.”

For example, “Hulu now caps the length of all ad breaks at 90 seconds (and in some cases less),” reports Variety. “It has long shown how much time is left in an ad pod with a countdown clock in the corner.”

According to Naylor, the company continues to experiment with less intrusive approaches. “After research showed Hulu users pause content 1 billion times per month, it began running ‘pause ads’ on screens with select advertisers,” adds Variety. Since half its subscribers engage in bingeing, “Hulu is planning to introduce an ad product tailored to binge-watchers with contextually relevant messages.”

Hulu is also pitching sponsors with a model that offers viewers of two consecutive show episodes the option to watch the next episode ad-free if they first watch a single 90-second spot.

“Asked whether Netflix or Amazon Prime Video might move to introduce ad-supported tiers like Hulu, Naylor allowed that it’s a possibility,” notes Variety. “If ad-free subscription VOD platforms decide to jump into the ad business, they would likely have lighter ad loads than TV and ‘informed targeting,’ ultimately accelerating the long, slow decline of traditional television advertising, he said.”

Last month, Comcast agreed to sell its stake in Hulu to Disney. The deal followed Disney’s acquisition of 21st Century Fox’s movie and TV studios and AT&T’s decision to sell back its share to Hulu. Disney plans to launch its Disney+ direct-to-consumer streaming service with family-friendly content, while Hulu will feature more content geared for adults.