In January, Hulu unveiled plans to reduce the cost of its ad-supported streaming service by $2 per month—just days after Netflix announced that it would raise subscription prices across the board. At the same time, Hulu raised the price of its linear over-the-top (OTT) service, Hulu + Live TV, by an additional $5 per month.
The adjustment is expected to bring more users to the platform, which in turn will help grow Hulu’s ad revenues.
“In such a competitive video streaming landscape, Hulu cutting prices for its low-tier ad-supported streaming subscription will almost certainly increase viewership, attracting those who had been on the fence about having the entry-level Hulu option,” said Monica Peart, senior director of forecasting at eMarketer.
Viewers generally respond favorably to advertisements when compensated. More than half (56%) of US video viewers don't mind seeing ads if they're paying a reduced fee, a study by the Interactive Advertising Bureau (IAB) found.