Hulu Plus, Take Two: How's $4.95 a Month?
Hulu is considering cutting the price on Hulu Plus, the subscription service it began testing in June, sources tell me. I'm told the video site is talking about slashing its $9.95 per month fee in half, to $4.95.
Context & Ripple Effects
Hulu Plus has been in public preview since June 2010 at $9.95 a month, pitched as the paid tier on top of Hulu's free ad-supported site. An August analysis found over 88% of full-length TV episodes on the service were already streaming free on Hulu.com, leaving device access and catalog depth as the main things a subscriber actually buys.
A reported cut to $4.95 reads as a direct response to that weak differentiation story — halving the ask narrows the gap between what the tier costs and what it uniquely offers. It also lands while CEO Jason Kilar is fielding questions about a potential IPO, which remains unconfirmed but gives Hulu reason to want subscriber numbers that look like a business.
First-order effects
- If the $4.95 price holds, early Hulu Plus subscribers pay half as much for the same service, and Hulu trades near-term per-subscriber revenue for conversion volume during the preview period.
- Hulu's network owners — the ABC, NBC and Fox parents whose shows make up the catalog — see their paid-tier economics repriced before the service has even left testing.
Second-order effects
- With roughly nine in ten full episodes available free, a cheaper Plus pushes Hulu to deepen the paid tier's actual exclusives or earlier access, forcing the networks to confront how much they will window away from the free site.
- Rival subscription video services face a new low anchor for TV-library pricing, pressuring anyone charging more to justify the premium with content the free web doesn't carry.
Third-order effects
- If a sub-$5 ad-supported subscription proves out, it establishes the hybrid free-plus-cheap-paid ladder as the default structure for streaming TV, with advertising rather than subscription fees carrying the model.
- Pricing this aggressive only works if content owners accept smaller per-subscriber checks in exchange for scale — a tension that will shape every subsequent carriage-style negotiation between studios and streaming distributors.
The trend: Subscription video is settling into low-priced, ad-supported tiers where the fee covers convenience and devices while advertising carries the economics.