Hulu Unveils Ad-Free Subscription Pricing

Mike Hopkins - H 2015
AP Images

Mike Hopkins - H 2015

For $11.99 a month, subscribers can view Hulu's content without the advertisements.

Hulu is going ad free. 

The streamer is introducing a new subscription tier that serves up its library of content without the commercials for $11.99 a month.

This marks the first time that Hulu has offered its videos without the ads. It launched with free, ad-supported video in 2008, and then the following year introduced a subscription service, then titled Hulu Plus, that included limited advertising. But CEO Mike Hopkins says consumers have asked for an ad-free way to watch its videos, which include originals like animated series The Awesomes and comedy Difficult People and exclusives like Empire. "There was a segment of custumers that said, 'look if you had a commercial-free option, we'd be willing to pay more for it and we'd be happier with the plans,' " says Hopkins. 

With the introduction of an ad-free subscription, Hulu will now have three options for customers: the free offering with a limited amount of next-day TV, the standard $7.99 a month subscription that includes access to exclusive and original programming and the $11.99 a month ad-free subscription. 

Hopkins says that the two subscription offerings will be identical except for the presence of ads. Hulu has spent the better part of the last year clearing the rights for the ad-free offering and only seven shows — including Scandal, Grey's Anatomy and Once Upon a Time — will include short pre-roll and post-roll ads. "We're going to try to really have the differentiation only be the advertising," he adds. "We think it's important that the plans are the same except for that. I guess I would never completely rule out [additional offerings] but at the moment the goal is to keep the plans the same." 

Hulu settled on the $11.99 a month price point after researching what customers would be willing to pay for no commercials. But the higher price means that an ad-free Hulu will cost more than competitor Netflix's $7.99 a month streaming option, Amazon's $99 a year ($8.25 a month) Prime offering and even Showtime's $10.99 a month app. It's slightly less than the $14.99 a month HBO Now. 

Hulu has 9 million paid U.S. subscribers, a much smaller number than the 42 million U.S. subscribers that Netflix reported in July. The move to go ad free will help Hulu to compete with Netflix in the increasingly competitive streaming market and comes after Hulu has spent months investing in its programming to set its service apart, striking streaming deals for a number of exclusive titles including Seinfeld, Fargo and South Park. Meanwhile, under the leadership of new content chief Craig Erwich, the company has created a development pipeline of original series including J.J. Abrams' 11/22/63 and The Way starring Aaron Paul

Hulu — owned by 21st Century Fox, Walt Disney Co. and Comcast Corp. — has long been viewed as an industry friendly streaming service because of its ads. Hopkins says that shouldn't change with the new ad-free tier. "We're really working hard to create that sort of symbiotic relationship with our partners," he says, noting that Hulu's industry partners like that the streamer markets the original network of each show it airs.

While the ad-free subscription gives viewers more choices, Hopkins says Hulu remains committed to serving up ads on Hulu's two other offerings. He predicts: "I think that we're going to end up with a good, solid majority of our customers in the ad-supported plan."