Days after Netflix said it was hiking prices across the board, rival streamer Hulu today announced it was slashing the cost of its cheapest plan. Starting February 26, the basic ad-supported level of the service will drop to $5.99 per month, a 25-percent decrease from the current $7.99 rate. The less-good-but-not-really-bad news: If you prefer to Hulu without those annoying commercials, the monthly fee will remain at $11.99.
The new price structure means Hulu will continue to be the least expensive of the Big Three subscription-based video on-demand streamers, but while Hulu is making it cheaper to sample its wares, the company is raising the cost of at least one of its offerings. Hulu with Live TV — which bundles the core subscription service with feeds of 60-plus broadcast and cable channels — will soon set consumers back $44.99 each month, up about 13 percent from the current $39.99 monthly fee. Competitors such as YouTube TV and DirecTV Now cost a minimum of $40 per month (at least for now), but they don’t include a Hulu-like VOD service. What’s more, DirecTV Now owner AT&T has hinted it will likely up the price of its direct-to-consumer offering again this year, perhaps substantially.
So why the mixed signals from Hulu — price cuts for some, but increases for others among its just-over 25 million subscribers? A source familiar with the company’s thinking says when Hulu has offered the $5.99 price as a limited-time-only promotional offering, it’s resulted in more usage and fewer people canceling the service. Plus, with Apple, AT&T, Disney, and others set to jump into the streaming wars this year, it makes sense for Hulu to get as many folks as possible hooked into its ecosystem now — and then hope they’ll eventually upgrade to one of the more expensive tiers of service. By contrast, folks now paying for Hulu with Live TV are most likely serious cord cutters who’ve already replaced their traditional cable TV bundle in favor of Hulu’s digital alternative. Hulu is likely betting most of these consumers will shrug and accept the higher cost, particularly since cable and satellite options are almost all more expensive (and have also upped their prices this year). For those who aren’t so accepting, at least one less expensive option just became more accessible: YouTube TV today announced it was expanding to 95 more markets across the country, making it available pretty much nationwide for the first time.