You can expect Hulu to become the number one live TV streaming service in the U.S. soon.
This would mark a significant change in the hierarchy which up until now had been solidified by AT&T’s DIRECTV NOW and Dish Network’s Sling TV.
But the times are a-changin’.
In the last few months Sling TV and DIRECTV NOW have hit a wall in terms of growth. In DIRECTV NOW’s case, that wall seems to be moving and pushing the service backwards as it has lost around 20-percent of its entire user base compared to the same time a year before.
This subscriber exodus has also come at a time when Hulu seems to have started picking up steam and subscribers.
It is now commonly believed Hulu holds around two million live TV subscribers (Hulu doesn’t officially disclose exact numbers), and if correct that means Hulu has leapfrogged DIRECTV NOW into second position behind Sling TV.
Sling TV has not seen the losses DIRECTV NOW has in the last few months but its wall is clear as the service has seen very little growth in 2019, and at a time when a number of DIRECTV NOW leavers have been there for the taking.
This is in addition to the one million additional people that have reportedly ‘cut the cord’ in 2019 already.
With so many subscribers there for the taking, and Sling TV not taking them, it would seem it is open season for Hulu…and to a lesser degree YouTube TV.
While Hulu is now the talk of the live TV streaming town, its rise has been a quiet one. The service is fairly new in terms of live TV and many might assume Hulu has simply reaped the reward of the discontent between DIRECTV NOW and it’s subscribers.
But that’s not the full story here.
Hulu’s playing the long game
One of the major issues for live TV streaming services is the price point. Many of these have been running at a per-subscriber loss to date as they look to build up momentum and a sizable subscriber base.
In their minds, prices have always needed to go up and so it was just a matter of time. 2019, it would seem, is when these services have collectively decided is that time.
YouTube TV and DIRECTV NOW both upped their prices within the last couple of months and to the exact same $50 entry point – $50 or thereabouts is the new base price across the board.
Of the two, arguably YouTube TV has ridden the price increase pressure better as it decided to expand its channel lineup at the same time. Therefore offering consumers more content and channel access for a higher price.
In contrast, DIRECTV NOW decided to just throw caution to the wind and unleash all of its bad news at the same time by increasing prices and decreasing the number of channels it offers customers.
In other words, while YouTube TV upped its price, the value arguably remained the same. With DIRECTV NOW, the value on offer is less than before.
Now, Hulu has not been exempt from all of this as it was actually one of the first to up the cost in 2019. But, compared to DIRECTV NOW, YouTube TV and fuboTV, Hulu only upped its price by $5 per month.
Fast forward to now and in spite of being the first of these four services to up its price, it is now the cheapest option as it remains $5 cheaper than both DIRECTV NOW and YouTube TV, and $10 cheaper than fuboTV.
Yes Sling TV remains even cheaper at $25 per month, but Sling TV does not offer a comparable product in this sense. Instead, on content/features, Sling TV is very much in between the premium live TV streaming solutions mentioned and the likes of Philo TV.
Arguably, being squeezed by both of these sides is exactly why Sling TV is now struggling to find new growth.
Hulu’s secret weapon
Emerging as a cheaper option than DIRECTV NOW, YouTube TV and fuboTV (and priced equally to PlayStation Vue) is certainly something that’s currently playing in Hulu’s favor, but that too is not the full story.
Where Hulu has been extremely clever is in the bundling of its standard Hulu on-demand service with its + live TV service.
Generally, the standard Hulu costs $5.99 per month and with that included it could be argued that Hulu with live TV technically only costs $39 per month. Suddenly, it’s even more cheaper than DIRECTV NOW, YouTube TV and fuboTV, as well as now cheaper than PlayStation Vue.
Even if you don’t ascribe to the suggestion it is $39 per month due to the unlikelihood of some of those live TV customers also wanting to pay the additional $5.99 per month for the standard service, Hulu is still in a better position because of the bundling…and so are its customers going forward.
The real benefit is that the bundled Hulu standard service is the ad-supported version. This has become a big growth point for the company as it is what differentiates standard Hulu from Netflix.
Like Netflix, Hulu has an ad-free version of its service available priced at $11.99 per month – basically, the same price as Netflix.
Unlike Netflix, by offering an ad-supported version at a lower cost, Hulu is able to attract more users while not necessarily losing any revenue.
This also applies to the bundling of the two Hulu services. With the on-demand service lumped in with the live TV option, Hulu is able to generate additional income through the use of ads.
Yes, all of the major live TV streaming services utilize ads in addition to a monthly subscription, but this is beyond that as the content available through the on-demand catalog is not content accessible through any of the other live TV services. This includes access to Hulu’s own original TV shows and movies as well.
Again, some services like DIRECTV NOW do offer additional content including original TV shows and movies but we’re talking about different scales here. In Hulu’s case, it is the equivalent to bundling Netflix in with a live TV services, and displaying ads during each Netflix playback, and still being priced cheaper than the live TV streaming competition.
In theory, AT&T does own enough content now to where it could really take on Hulu at its own game but AT&T seems more preoccupied at launching varying services to appeal to different users instead of a catch-all solution like Hulu. Even if AT&T did decide to take on Hulu, AT&T’s recent actions suggest it would not launch such a rich product at anywhere near the price Hulu currently charges.
Scale is key
This is not to say that Hulu is rolling in per-user revenue when it comes to live TV. It is likely not, and it too is likely either losing money for each subscriber or barely breaking even. But this is where the long-game approach comes in and where scale matters.
If Hulu can build out a significant user base that not only subscribes to its live TV option but also by default subscribes to standard Hulu, then the service will be in an optimal position to keep driving forward with a price-driven service.
The more users, the more ad revenue, and the more ad revenue it can generate the more it offset against how much it charges customers at the point of access.
This is exactly the approach Hulu takes with the standard Hulu subscription and there’s no reason to suggest it won’t work equally as well with the live TV solution. When Hulu upped the price of its live TV service from $39.99 to $44.99 per month, it dropped the price for the standard Hulu service down from $7.99 per month to $5.99 per month.
A streaming service decreasing its price in 2019 is almost unheard of but that’s exactly what Hulu did as it can see that the more the user base grows, the more the lower and ad-supported model can be of benefit.
Arguably, this is also a gateway move as if it can get more users hooked on the standard Hulu experience then the option to upgrade to include live TV for just $39 more per month will be even more appealing.
The key for Hulu is simply to keep attracting more users and so far in 2019, that does not seem to be a problem, and it is unlikely to be a problem in the near future.
Hulu will continue to offer better overall value and will also continue to ensure it remains competitively priced. The two combined together is almost a guarantee for success right now and due to this Hulu will continue to attract users cord-cutting for the first time, as well as those abandoning their current live TV streaming service.
All of this, is also without even taking into consideration how Disney (now in full control of Hulu) might decide to offer even more value by bundling more services together later in the year.
Right now, Hulu is unstoppable when it comes to live TV streaming.