Hulu May Finally Offer Ad-Free Subscription Option, But It Won’t Be Cheap

hulugrabbbAfter years of hoping that consumers would eventually come around to the idea of paying for streaming video content that is still interrupted by obnoxious, repetitive commercials, the folks at Hulu may finally be willing to give folks the option of paying for an ad-free version of the service.

Hulu is jointly owned by the parent companies of NBC, ABC, and FOX. The hope had long been that merely offering online access to recently aired, current-season episodes of shows from these networks (and others) would be enough to differentiate it from Netflix and Amazon Prime. Those services don’t run ads during shows or movies, but most of their TV content is at least a season old.

Another repeated justification for the ads on Hulu is the $7.99/month price point. That’s the same price as Netflix’s lowest level of service, but Netflix only offers standard-definition streams for users on that tier.

In spite of the slightly lower price point and the less-stale TV content, Hulu still only has a fraction of Netflix’s user base. The service has around 9 million paying subscribers, compared to more than 65 million worldwide for Netflix (more than 40 million in the U.S. alone).

According to the Wall Street Journal, Hulu is finally bending on its insistence on running ads and is working on a project with the code name “NOAH” (for “NO Ads Hulu”).

But if the Journal’s sources are correct, Hulu is considering charging between $12-$14/month. That means the lowest level of NOAH service would be the same price as the highest current tier of Netflix service. For $12/month, Netflix offers up to four simultaneous streams and access to titles in Ultra HD.

It’s possible that Hulu’s broadcaster ownership is putting such a high price tag on NOAH in order to minimize the number of users who would choose to migrate to this tier. The networks would still rather have the dual revenue streams of subscription fees and ad buys rather than relying purely on subscribers, so the pricey ad-free tier seems targeted at those consumers who would never sign up for Hulu’s ad-supported service.

Hulu’s paying subscriber base is now around nine million, up from six million last year, although it remains tiny compared with Netflix, which on Wednesday reported that it has 65 million world-wide subscribers.

Hulu is on track to bring in about $1.5 billion to $1.7 billion in revenue this year, the people said. Netflix revenue in 2014 totaled $5.5 billion.