HULU Case

Aastha Guliani

Andres Jiminez

Date Submitted: November 17th, 2024

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Executive Summary

The project investigates Hulu's pricing strategies within the competitive streaming

industry, assessing the efficacy of tiered pricing, bundling, and ad-supported models.

Hulu’s ability to cater to diverse customer segments with a multi-pronged approach has

fostered significant subscriber growth and revenue generation. Key findings include:

1. Tiered Pricing: Hulu’s pricing tiers, ranging from an ad-supported basic plan to

premium bundles with live TV, target varied consumer preferences effectively.

2. Bundling Advantage: Hulu’s integration with Disney+ and ESPN+ as part of the

Disney Bundle creates value, reducing churn rates and enhancing cross-platform

engagement.

3. Ad-Supported Revenue Model: Ad-supported tiers drive substantial revenue,

leveraging data for targeted advertising to optimize user experience and

profitability.

4. Market Positioning: Despite higher standalone pricing, Hulu maintains

competitive advantage through live TV offerings and a robust content library,

including licensed and original content.

Recommendations include adopting dynamic pricing, regional adjustments, and niche

bundling to expand market reach and further personalize user experiences. Insights into

leveraging user data for tailored content development and dynamic ad experiences

underscore Hulu’s focus on innovation to sustain market leadership.

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TABLE CONTENTS:

I. Introduction

II. Analysis and Insights: Hulu's Pricing Strategy

1. Current Pricing Strategy Used by Hulu and Its Success

a. Tiered Pricing Model

b. Price Bundling Strategy

c. Ad-Supported Revenue Model

III. Recommendations for Hulu to Enhance Its Pricing Strategy

1. Expand Dynamic Pricing Capabilities

2. Develop Niche and Regional Bundling Options

3. Implement Regional Pricing Strategies

IV. New Insights

1. Content Diversification Through Strategic Licensing

2. Leveraging User Data for Targeted Content Development

3. Experimenting with Tiered Ad Experiences

V. Conclusion

VI. References and Graphs

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INTRODUCTION

The streaming industry has revolutionized how people consume media, moving away

from traditional cable television to on-demand, internet-based platforms. Hulu, launched in

2007, became a pioneer in this transformation, offering a diverse library of content that includes

original programming, licensed TV shows, and movies. By providing subscription options

tailored to varied preferences, Hulu quickly established itself as a prominent player in the U.S.

market. Its evolution has mirrored the dynamic growth of the streaming sector, characterized by

increasing competition and innovation.

The broader streaming industry includes global giants like Netflix, Disney+, and Amazon

Prime Video, each with distinct strengths. Netflix dominates with its extensive library of original

content and high-quality streaming, while Disney+ leverages its exclusive access to franchises

like Marvel, Star Wars, and Pixar. Amazon Prime Video benefits from its integration with

e-commerce services. Hulu, however, sets itself apart by balancing original content with

next-day access to popular network TV shows and live TV options, making it a versatile choice

for consumers.

As the streaming landscape continues to grow and diversify, Hulu has adapted through

innovative strategies such as tiered pricing, ad-supported models, and bundling with Disney+

and ESPN+. These efforts have positioned Hulu as a platform capable of meeting the diverse

needs of modern consumers. By continuously enhancing its offerings and leveraging market

insights, Hulu remains a competitive force in an ever-evolving industry.

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ANALYSIS AND INSIGHTS: Hulu's Pricing Strategy

1. Current Pricing Strategy Used by Hulu and Its Success

Hulu has evolved its pricing strategy significantly over the past five years, employing a

mix of tiered pricing, bundling, and an ad-supported model. This multi-pronged

approach has allowed Hulu to effectively capture different segments of the market and

adapt to changing consumer preferences. I will explore each component in detail,

supported by data and trends from the past five years.

A. Tiered Pricing Model

Hulu's tiered pricing model consists of several subscription options:

1. Ad-Supported Plan ($9.99/month): This is the entry-level plan that appeals to

price-sensitive customers. It offers the complete Hulu library with advertisements.

2. Ad-Free Plan ($18.99/month): Targets viewers who prefer an uninterrupted

experience, willing to pay a premium for no ads.

3. Hulu + Live TV: This tier includes two primary options:

- Hulu (With Ads) + Live TV ($82.99/month): This includes ad-supported Hulu along

with Disney+ (with ads) and ESPN+ (with ads).

- Hulu (No Ads) + Live TV ($95.99/month): Offers ad-free Hulu along with Disney+

(no ads) and ESPN+ (with ads).

Pricing Comparison and Analysis of Hulu's Strategy with the Competitors

(Exhibit A)

To provide a comprehensive comparison of Hulu’s pricing model with its key

competitors, I will integrate additional data on Hulu’s tiered pricing structure,

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performance metrics, and success indicators. This expanded analysis highlights how

Hulu leverages its tiered approach and compares its offerings with those of Netflix,

Disney+, Amazon Prime Video, HBO Max, and YouTube TV.

HULU VS COMPETITORS

A. Hulu vs. Netflix

Hulu offers viewers an ad-supported plan for $9.99 per month, while Netflix offers

basically an ad-supported plan for $6.99 a month. Yet, Hulu can afford this premium by

providing users with more content, as well as live TV and more bundle options through

Disney+ and ESPN+. Netflix, of course, concentrates on the original show and movies

and has excellent streaming quality in the Premium 4K package for $19.99 monthly,

similar to Hulu’s superior plans but which do not include the live streaming.

Success Metrics:

● ARPU Comparison: Hulu’s SVOD ad-supported service ARPU, which stands for

average revenue per user as of Q1, 2024, is $12.29, while according to Q2,

2023, data, it is $11.73 Statista. This means Hulu has been commanding higher

prices for its ads while the improved overall ad revenues indicate that ad

targeting the Hulu’s unique niche of a premium audience is potentially profitable

for the company.

● Subscriber Growth: Hulu has seen its subscriber increase to 74.4% within five

years, from 28.5 million in 2019 to 49.7 in Q1 2024​Evoca. However, Netflix with

the highest number of subscribers in terms of total, slows down growth in the

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 subscriber-base, especially in the less significant market such as the America.

B. Hulu vs. Disney+

With Disney Bundle, Hulu will receive many advantages from being bundled with Disney+ and

ESPN+ platforms. Hulu comes equipped with a large collection of movies and TV series

accessible for families and young people, as well as, the service includes recognizable film

series from Marvel and Star Wars, so it can be stated that Disney+ has a competitive

advantage. Nonetheless, the Disney Bundle ($14.99-$19.99) with Hulu lets one having all

necessary entertainment needs at an affordable price, which will suit households that watch

everything from general entertainment to sports.

Comparison of Value:

● Bundling Advantage: Currently, the Disney Bundle is cheaper by about 25% if

users were to buy the services individually. Besides, the strategy positively

influences the Hulu’s activity rates, along with the overall user churn rate among

the consumers targeting various content types.

● Pricing Differentiation: Disney+ standalone subscription base prices stand at

$7.99 – $10.99 per month while Hulu’s pricing is relatively more expensive on a

standalone basis. The most popular SKU is still the Premium Disney+/Hulu

Bundle at $19.99 in a household, as Hulu plans to optimize cross-sell

opportunities.

C. Hulu vs. Amazon Prime Video

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For more explicit comparison, Hulu has basic and standard tiers, which is set for $9.99

monthly subscription, similar to the Amazon Prime membership that avails the Amazon

Prime Video for $14.99monthly subscription. Further, it provides streaming of movies,

TV shows, and Amazon’s original series; actually, it’s a hook for customers who are

frequent buyers from Amazon and it covers free shipping and several other offers.

Differentiating Factors:

● Content Focus: Hulu stands out for its robust collection of shows and movies –

many of them original, next-day air TV programs, live TV choices. Therefore this

appeal to current and exclusive programme content is appealing to users who

prefer up to date programmes.

● ARPU Stability: A result, Hulu has been successfully carving a stable ARPU

through its concentration on acquiring premium contents and growing ad

revenues. What makes Prime Video distinct is that the streaming content is

available under the package price linked to the e-commerce retailer, which could

thereby diminish the perceived worth of the streaming content only.

D. Hulu vs. HBO Max

Hulu has also two plans one with ads cost $9.99 per month, and the ad-free plan cost

$18.99 per month, which are competitive with HBO Max’s tiers. However, HBO Max

targets only the clients interested in unique, costly TV shows and new movies (e.g.,

Game of Thrones, The Last of Us).

Competitive Edge:

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 ● Live TV Offering: Live TV option is available for $82.99-$95.99 on Hulu, which is unique

to it while HBO Max doesn’t include live TV. This feature targets users who are eager to

tune in for live sports, news, and other real-time events thus increasing Hulu’s value

proposition to cable-cutter clients.

● Content Variety: HBO Max has more expensive and unique shows whereas Hulu

increases the audience’s coverage including the viewers of popular network TV shows.

This diversity explains enhanced customer interactions and works to level out subscriber

acquisition.

E. Hulu vs. YouTube TV

YouTube TV provides only live TV streaming at $72.99 per month. The live TV plan by

hulu costs more ($82.99 with ads), but it comes with the entire hulu streaming library,

Disney + and ESPN.

Performance Metrics:

● ARPU Leadership: Hulu + Live TV achieved an ARPU of $93.61 in Q1 2024, up

from $90.08 in Q4 2023, indicating strong demand for this bundled,

live-streaming service​Evoca .

● Subscriber Engagement: Hulu’s combination of on-demand streaming and live

TV helps maintain higher engagement rates compared to YouTube TV, which

primarily attracts viewers looking for a cable replacement.

Average Price Comparison (Exhibit C)

To determine how Hulu’s pricing aligns with industry standards, we calculated the average price

for standard ad-free plans among its main competitors.

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The average monthly price for standard ad-free streaming services is $15.29. Hulu’s no-ads

plan is priced slightly above this average at $18.99, reflecting its additional offerings such as

exclusive content, next-day TV access, and integration with live TV options.

Perceptual Map Analysis: Positioning of Hulu vs. Competitors

Axes: (Refer to Exhibit B. )

● X-Axis (Content Variety/Features): Ranges from basic offerings (limited original content,

fewer features) to extensive (live TV options, diverse content library, original series).

● Y-Axis (Price): Ranges from low cost to high cost

- Hulu places itself into the high content variety and mid to high price range because of

the inclusion of live TV as well as extensive packages.

- Netflix makes high content, high price derivation which shows that Netflix is primarily

designed for original content and high quality streaming.

- Disney+ is recognized to occupy the mid-price high content variety place and aims

mainly at the family and exclusive brands.

- Amazon Prime Video can be placed in the mid-price, mid-to-high content type matrix,

thanks to meaningful connections with Amazon services.

- HBO Max focuses on serving the segment of premium, expensive and exclusively

unique content.

- YouTube TV is positioned primarily at the high price and low content diversity, where

users are offered mostly live content rather than streamable videos.

B. PRICE BUNDLING STRATEGY

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Pricing has been another shift in Hulu’s main strategies, whereby Hulu is bundled with

Disney+, ESPN+ as the Disney Bundle. The combination of services in one bundle

makes it cheaper than when the services are purchased separately thus increasing

users’ perceived value and thus decreasing churn rates. . The Disney Bundle is priced

as follows:

- Basic Disney Bundle with Ads ($14.99/month): Includes ad-supported Hulu,

Disney+, and ESPN+.

- Premium Disney Bundle with No Ads ($19.99/month): Offers an ad-free experience

for both Hulu and Disney+, with ESPN+ remaining ad-supported.

Impact of Bundling:

- Reduced Churn: This strategy has been found to improve on the number of subscribers

keeping their subscriptions. Users are less likely to cancel when they are subscribed to multiple

services, as it offers more comprehensive entertainment options.

- Cross-Platform Engagement: Research confirms that overall usage and loyalty is more

among the customers subscribed with three service bundles, and in turn, they interact more with

the content across the three platforms. The bundle has been a growth engine and has helped

Hulu gain more market share in the U.S. where it currently has 11%, Q2 2023.

Financial Success:

- Revenue Growth: The bundling strategy has been a key driver of Hulu’s revenue

increase from $4.5 billion in 2019 to $11.2 billion in 2023, marking a compound annual

growth rate (CAGR) of 21.7%.

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- Subscriber Acquisition: The Disney Bundle has helped Hulu capture a broad

demographic, contributing to a 14.65% subscriber growth rate in 2024 compared to the

previous year.

C. Ad-Supported Revenue Model

Hulu’s ad-supported plan is an important part of Hulu’s pricing plan because it offers

basic services to the consumer while gaining a lot of ad revenue. Especially during big

events, ad-supported tier was the major source through which Hulu derived its income.

Analysis of Ad Revenue Trends:

- Steady ARPU from Ads: The ARPU of the advertisement Carrier was $12.29 in Q1 2024

which was little higher that in the previous quarters. This continuity suggests that the ad

revenues for Hulu have remained fairly stable which of course is relative to the changes in the

market for ads.

- Diversified Revenue Streams: The blend of subscription fees and advertising income is a

balanced model of income generation; thereby minimizing the dependence on either of the

sources. For the year 2023, Hulu’s advertisement revenue was $2.1 billion putting it at the list of

the most popular CTV (Connected TV) advertisement selling platforms in the United States.

Success Evaluation:

The ad-supported model has been effective in the development of the audience, especially the

young democrative and housekeeping all-in-one but cheap customers. It enables Hulu to

express competitive prices with serious revenues originating from the targeted commercials.

2. Recommendations for Hulu to Enhance Its Pricing Strategy

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The current plan of Hulu is quite good in its present form regarding pricing models, but

there are several crucial aspects, which a company can improve or invent to make it

more competitive in the market and increase revenues at the same time. Based on the

data and trends analyzed, the following remind strikethrough detailed

recommendations.

A. Expand Dynamic Pricing Capabilities

Real time pricing, through artificial intelligence and machine learning, would assist Hulu

to perform a fluctuating pricing structure in response to the user demand and the

content. Implementing a dynamic pricing model can:

- Enhance Revenue During Peak Demand: For general releases which are most

probably the new seasons of most famous series, Hulu could decide to raise its prices

for new users in order to reap the benefits during that time.

- Personalize Offers: Changing the prices according to the activity of the user and his

or her attitude will contribute to the enhancement of the rate of conversions. For

instance, replacing ads with an offer of a discount that is for users who have often

clicked on ads could make them subscribe to the ad-free model.

Implementation Strategy:

Hulu needs to acquire predictive analytics and dynamic pricing tools are suggested;

Hulu ought to be able to change subscription fees based on user information and

market competitiveness. In similar service scenarios, which also applied dynamic

pricing solutions this method has given a 20-25 percent increase in sales.

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B. Develop Niche and Regional Bundling Options

However, Hulu could tap even further into bundling concepts and perhaps create even

more targeted bundle offers that might find their way to niche customer demographics

For example:

- Family Bundles: Make it bundle one which consists of Hulu and Disney+ and other

family plus’s such as learning subscriptions.

- Sports Enthusiast Bundles: Develop packages focusing on ESPN+; for the target

users who are lovers of live sports with extras for the most popular leagues.

Benefits:

- Increased Market Penetration: Niche bundles are useful because they can attract

the audience that may not have interest in the extensive offers of Disney Bundle, and

expand to new customer segments.

- Enhanced Customer Loyalty: As business models are fine-tuned, users are served

most relevant content thus enhancing their satisfaction and deterring them from leaving.

C. Implement Regional Pricing Strategies

Hulu could adopt regional pricing to better align with different income levels and market

conditions. By offering lower-priced plans in emerging markets or areas with lower average

income, Hulu can increase accessibility and expand its user base.

Expected Outcomes:

- Higher Subscriber Growth: Regional pricing could lead to a 10-15% increase in new

subscribers from underpenetrated markets.

- Improved Competitive Positioning: This strategy would allow Hulu to better compete with lower-cost

alternatives in international markets.

1. Content Diversification Through Strategic Licensing

Hulu’s licensing of niche, international, and non-mainstream content is a deliberate

move to attract audiences looking for unique shows not available on competing services

like Netflix or Disney+. This approach meets the trend in which the viewers look for

programs that are different from the standard Hollywood productions.

Other platforms such as Netflix, Amazon Prime Video, and even Disney+ have invested

in licensing non-mainstream content. However, what sets Hulu apart is the targeted,

niche approach to acquiring international and lesser-known content. While Netflix has

a broader international content library, Hulu's focus on curating content like independent

films, Korean dramas, and international thrillers may cater more effectively to

underserved audiences looking for content that isn’t available elsewhere

Difference: Hulu's strategy focuses on offering a curated selection of content that

appeals to specific cultural and genre preferences, providing a niche experience rather

than just mass internationalization. This allows Hulu to tap into markets that aren’t just

looking for the latest blockbuster, but for unique content that speaks to smaller, more

engaged audiences.

2. Leveraging User Data for Targeted Content Development

Hulu’s approach is data oriented – the company created a model of creating content that

emulates the most successful genres and themes, according to the data provided.

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Both Netflix and Hulu use user data for content recommendations, but Hulu takes it a step

further by directly integrating user analytics into its content development process. While Netflix

produces content based on broader trends, Hulu’s data-driven approach actively shapes what

shows get greenlit, based on direct user engagement metrics.

Difference: Hulu doesn’t just use data for recommendations—it shapes its content

pipeline based on real-time viewer engagement. This gives Hulu a more agile approach

to content production, allowing the company to be more responsive to audience

demand before trends fully emerge. This makes Hulu more predictive of what content

will resonate, thus reducing the risk of producing content that doesn’t perform well.

3. Experimenting with Tiered Ad Experiences

Other platforms with ad-supported models, such as Peacock or YouTube, also feature ads but

usually with a one-size-fits-all approach. Hulu’s tiered, dynamic ad experience that customizes

ad loads and types based on user behavior is unique. The ability to tailor ad experiences based

on viewing habits and interaction is something Hulu is exploring more actively than its

competitors, who generally offer fixed ad experiences or limited options.

Difference: Hulu's customizable, data-driven ad experience introduces a higher level

of user control and satisfaction. The flexibility to show fewer, more engaging ads based

on viewing patterns, combined with interactive and shoppable ads, enhances the user

experience while simultaneously improving ad revenue through more targeted

campaigns. This personalized model stands out compared to other platforms with rigid

ad policies, offering a more tailored and less intrusive experience.

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Comprehensive Conclusion on Hulu's Pricing Strategy

With all of the competition in the streaming industry, Hulu has benefited from a smart

pricing strategy. The wide range of the consumers is catered to by Hulu through use of

a multi tiered approach such as affordable ad supported plans, ad free premium

subscription plans, and those including a live TV. Hulu's ability to strike a balance

between meeting a diverse customer set’s needs and generating meaningful revenue

by charging subscribers and showing targeted ads has made this flexibility possible.

Besides combining with Disney+ and ESPN+ which amplifies its value proposition, only

adding the integration with Disney+ and ESPN+ makes it a great part of a very robust

ecosystem that helps engage and empower customers to go to great lengths and in

most cases achieve loyalty.

Hulu has succeeded thanks to the power of being a backbone of the ad supported

revenue model. With ads and subscriptions, Hulu has its money coming from two

streams: ads and subscriptions, so it’s not just one revenue model. Additionally, Hulu is

a versatile streaming platform because it not only offers licensed next day TV shows,

but it also has a focus on premium content i.e. original programming. Hulu flavors its

other offerings with these elements, making it unlike other major competitors like Netflix

and Amazon Prime Video, which are not as well endowed with bundling or live content.

Hulu already has an opportunity to improve on its pricing strategy by introducing

dynamic pricing models, region allocations, and niche specific bundling options.

Advancements in analytics and user data will allow Hulu to more effectively predict

consumer preferences, understand demand and tailor experiences to users. With these

strategies, Hulu will not only increase revenue but also maintain its relevance and

competition in the changing market and remain a major player in the streaming space
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REFERENCE

● https://help.hulu.com/article/hulu-how-much-does-hulu-cost

● https://www.sec.gov/Archives/edgar/data/1744489/000174448923000213/fy2

023_q4xprxex991.htm

● https://evoca.tv/hulu-statistics/

● https://devtechnosys.com/data/hulu-statistics.php

● https://www.statista.com/statistics/1095077/hulu-average-revenue-per-subs

criber-us/#:~:text=As%20of%20the%20third%20quarter,revenue%20per%20

paying%20Hulu%20user.

● https://www.statista.com/statistics/1095077/hulu-average-revenue-per-subs

criber-us/

● https://www.disneyfoodblog.com/2023/11/08/hulu-and-disney-changes-ann

ounced-for-2024/

● https://uproxx.com/tv/hulu-and-disney-will-soon-roll-out-their-latest-price-in

creases-on-most-plans/

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Graphs

1. Exhibit A

2. Exhibit B

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3. Exhibit C

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