In this bog, we will discuss the topic that is “how does Hulu make money”, Areas of discussion will include what is Hulu, how does Hulu make money, Services offered by Hulu, the overview of the company as well as its business model. If you are interested in the topic, keep on reading below.

how does Hulu make money

Hulu makes money from two revenue sources such as Revenue from subscriptions and Revenue from advertisements.

Revenue from subscriptions

Since the corporation abandoned its free streaming plan, customers who want to use the service must pay a fee. The corporation receives a significant amount of money from the membership fees collected from these monthly memberships.

Revenue from advertisements

The most lucrative income stream for Hulu is, without a doubt, advertising revenue. According to the business, advertising income exceeded $1.5 billion in 2018, marking a 45 percent rise over the previous year.

Let’s discuss each of it down below but let’s first understand what Hulu is

What is Hulu?

Hulu may be viewed using a multitude of devices that are linked to the Internet. People may view television shows, films, documentaries, and other material via Hulu, which is an over-the-top media service (also known as an internet-based television streaming service).

According to its website, Hulu started on October 29, 2007, as a joint venture with AOL, Comcast, Facebook, MSN, MySpace, and Yahoo!, with a focus on television series rather than movies and other video material. As Hollywood executives saw the site’s potential, it quickly gained popularity as a venue to view current episodes of television shows.

The firm has partnered with the bulk of US cable television networks, including ABC, NBC, Fox, and CNBC, to establish one of the world’s largest online television program collections. Additionally, this firm has partnered with regional and national networks such as National Geographic, Fox, and Disney Channel to broadcast live television through the internet, obviating the need for cable television in certain instances.

Overview of the company

Name of the companyHulu
Type of FirmSubsidiary
Type of SiteOTT video streaming platform
Areas servedUnited States
Owner of HuluThe Walt Disney Company
Parent company of HuluDisney Media and Entertainment Distribution
Link to official websitewww.hulu.com
Launched inOctober 29, 2007

Among the features offered on Hulu are the following:

·       It is one of the world’s biggest on-demand television and movie libraries, with episodes from practically all television networks available the day after they show.

·       Members-only content such as The Handmaid’s Tale, The Looming Tower, and others is exclusively available to Hulu subscribers.

·       Around 200 localities in the United States have access to live television via broadcast networks.

·       A cloud-based DVR for HBO, SHOWTIME, Cinemax, and STARZ, as well as other premium add-ons, that enables on-demand viewing of HBO, SHOWTIME, Cinemax, and STARZ.

The history of Hulu

The firm initially operated on an ad-supported basis, which enabled users to watch TV episodes for free in exchange for seeing adverts that interrupted the stream of content. This business model was pretty like the one used by YouTube.

In 2010, in reaction to Netflix’s debut into the market, the firm established its premium membership program (plus). The premium membership was first available at $9.99 per month but was later reduced to $7.99. On the other side, this premium membership came with its share of advertisements. While it included the same amount of advertising as the free edition, it offered a broader selection of accessible programming and watching options for Hulu.

In 2015, the firm introduced a no-commercial premium membership level for $12 to $14 per month, however only a few programs retained pre-roll and post-roll advertising pods in their movies. Additionally, the firm worked with Yahoo to migrate its free content to Yahoo! View and shifted its economic strategy to a fully subscription-based revenue model similar to that of Netflix.

Hulu’s status as an online TV provider was further cemented in 2017 with the debut of the Live TV service, which allows consumers to view more than 50 broadcast and cable channels in real time. Following that, the inclusion of numerous more channels and programs was announced. Following that, revenue-generating additions such as HBO, Showtime, and Cinemax were launched, as well as revolutionary new features such as cloud DVR and six user accounts.

The Business Model of Hulu

The revenue model of Hulu is easy to understand. The revenue earning sources can be divided into two categories –

·       Revenue from subscriptions

·       Revenue from advertisements

Revenue From Subscriptions

Customers who want to use the service have had to pay since the company abandoned its free streaming strategy. The service has 25 million subscribers. Membership fees from these monthly subscriptions provide substantial revenue for the company.

The company provides four different basic subscription plans, with the first one starting at $5.99 per month. There are many upgrade options available for the base subscription, including no-ad interruptions, live TV, and no-ad interruptions Plus live TV.

Revenue From Advertisements

As a Hulu subscriber, you’ve certainly noticed that some episodes have pre-roll and post-roll commercial blocks, even if you have a subscription that doesn’t include advertisements. The most profitable revenue source for Hulu is, without a question, advertising revenue. According to the firm, advertising revenue totaled $1.5 billion in 2018, representing a 45 percent increase over the previous year.

In contrast to Netflix, this on-demand video streaming firm is not behind the times when it comes to attracting marketers to promote to its customers. Three ad-targeting options are provided by the company to assist advertisers in reaching a larger target demographic. The following are some examples:

When an advertiser captures practically every single unique viewer in a single day, this is referred to as a splash.

This is referred to as DMA targeting. DMA targeting is when an advertiser targets practically every viewer in a certain market.

Marketers may choose to target ads according to demographics, geographic area, content length, genre or any combination of these criteria.

Besides that, Hulu provides seasonal ad targeting options such as those for Earth Day, Mother’s Day, Father’s Day, and other special occasions.

According to the company, advertisers may choose from a basic interstitial ad to large brand integrations in Hulu original content, among other options.

Custom Integrated Commercial

When advertisers use Hulu’s unique video solution, the custom integrated commercial, their brand values and message are carefully combined with those of Hulu to produce a custom generated commercial that seems to be an organic part of the program rather than a commercial.

Custom Integrated Slates

Slates with integrated brand values and message, similar to custom integrated commercials, are used to introduce viewers to advertisements and subsequent content in a similar manner. They are seven-second pre-roll slates that feature brand values and message and are tailored to the content, exposing viewers to the ad as well as the material that follows after it.

Spotlight

Spotlight is a marketing tool that allows theatrical, TV tune-in, and video game marketers to reinforce their message and raise awareness for each new release by releasing trailers and teasers on Hulu.

Premium Slate

When it comes to e-commerce, Hulu also offers its clients turnkey marketing and sales solutions. Previously, the business partnered with Tomb Raider to use this technology to enable clients to buy theatrical tickets through their smart TVs.

T-Commerce

When it comes to e-commerce, Hulu also offers its clients turnkey marketing and sales solutions. Previously, the business partnered with Tomb Raider to use this technology to enable clients to buy theatrical tickets through their smart TVs.

Brand Integration

Hulu now offers over 40 original shows available exclusively via the streaming service. Because these events are produced in-house, marketers may work together with the brand to develop brand integration tactics.

How is Hulu different from others?

Subscriptions Based Revenue Model

According to previous statistics, subscription revenue accounted for 54% of Hulu’s overall revenue. This service offers consumers four fundamentally customizable subscription options. Users have access to Hulu’s massive collection of episodes and films, which varies in size depending on the duration of their subscription.

Add-Ons Based Revenue Model

Hulu includes add-ons with every plan, letting users pay for content on a per-streaming basis. Users may be required to pay an additional fee in order to view live television, HBO, CINEMAX, and other premium channels. Although there are just a handful of these add-ons, they make a significant impact in Hulu’s revenue model.

Advertisement Based Revenue Model

At the time of writing, Hulu had 82 million users, 36 million of whom paid for ad-free access and the remainder of whom paid for ad-supported access. The Hulu OTT platform’s ad-supported user base is continuously growing, offering marketers with the ability to reach millions of people. In 2019, Hulu produced 1.9 billion dollars in income only from advertising.

In conclusion, we have answered the question “how does Hulu make money”, Hulu makes money from two revenue sources such as Revenue from subscriptions and Revenue from advertisements. If you would like to add anything, then comment down below.

Frequently asked Questions (FAQ): How does Hulu make money?

How is Hulu making money?

The majority of Hulu’s revenue comes from membership fees. In reality, membership prices accounted for $2.9 billion, or 65.9 percent, of Hulu’s total income in the fiscal year 2020. In addition to Hulu, Hulu (No Ads), Hulu + Live TV, and Hulu (No Ads) + Live TV, Hulu (No Ads) + Live TV is also available.

Does Hulu turn a profit?

Hulu has proved to be more profitable than Walt Disney executives anticipated when the corporation acquired full control in 2019. Hulu earned a profit in the third quarter of fiscal year 2023, exceeding management’s aim for full-year profitability the following year by a wide margin.

How much money Hulu makes?

Hulu’s subscription-only video-on-demand service allegedly produced an average monthly income of $12.75 per paying member in the fourth quarter of 2021.

How much money does Hulu make in a year?

Hulu generates $2.4 billion in revenue every year.

Do Hulu ads make money?

The most profitable revenue source for Hulu is, without a question, advertising revenue. According to the firm, advertising revenue totaled $1.5 billion in 2018, representing a 45 percent increase over the previous year.

What business model does Hulu use?

Hulu now boasts 25 million subscribers and operates on a hybrid approach that includes both ad-supported free and paid subscription options. As a result, Hulu is an excellent example of an OTT network that combines ad-supported video on demand (AVOD) with subscription video on demand (SVOD).

References

Pahwa, A. (2021, August 18). How Does Hulu Work & Make Money? | Hulu Business Model. Retrieved from FeeDough: https://www.feedough.com/how-does-hulu-work-make-money-hulu-business-model/

purple, A. (2020, July 3). Hulu Business and Revenue Model: How Does It Work and Make Money? Retrieved from Apurple: https://www.apurple.co/hulu-business-model/

What was missing from this post which could have made it better?

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.