To obtain insights on Hulu, particulary ad revenue, subscriber revenue, marketing challenges, and cost to advertise on the platform. In addition, to understand the VOD industry including top competitors and business models.
Hulu Ad Revenue
Hulu Subscriber Revenue
- Hulu does not report financial numbers, however, based off of SEC filings of the parent company, Hulu is lost $1.5 billion in 2018.
- In terms of subscriber revenue, Hulu has 26.8 million paid subscribers.
- According to the company, 70% of subscribers are on the ad-supported plan at $5.99 per month. The remaining 30% pay $11.99 per month.
- Using these figures, we can estimate Hulu's subsciber revenue at roughly $2.5 billion.
- Trianguation 1: 26,800,000 x .7=18,760,000 x $5.99=$112,372,400 x 12=$1,348,468,800 from subscribers at $5.99 per month.
- Triangulataion 2: 26,800,000 x .3=8,040,000 x $11.99=$96,399,600 x 12-$1,156,795,200 from subscribers at $11.99 per month.
- Triangulation 3: $1,348,468,800 + $1,156,795,200=$2,505,264,000.
- Hulu is only available in the United States, making it hard to compete with other services such as Netflix.
- Since Netflix has over 130 million subscribers, it can afford to spend millions on original content, where Hulu only has 28 million.
- In addition, competitors such as Netflix run ad-free platforms. Hulu receives a large portion of its revenue through ads. It must balance these ads with user experience.
Hulu Ad Fees
- Hulu does not publish its advertising costs, however, according to SQAD’s MediaCosts the average ad on Hulu is $25 CPM.
- Due to the increase in subscribers, Hulu has reportedly lowered its advertising costs which were closer to $30 CPM.
Top VOD Platforms
Since many VOD companies do not release official revenue numbers, top players were chosen by number of subscribers.
- Netflix has about 137 million subscribers.
- Amazon Prime has over 100 million subscribers, however, only about 26 million use the VOD service.
- Though not officially launched, Disney+ is expected to have over 54 million subscribers.
Summary of Findings
- Ad revenue generated by Hulu in 2018 was $1.5 billion and is expected to reach $1.82 billio in 2019.
- Though not officially reported, Hulu's subscriber revenue can be estimated at around $2.5 billion.
- Marketing challenges experienced by Hulu are its smaller addressable market compared to other VODs and its ad-supported platform that may interfere with user experience.
- Hulu charges around $25 CPM for advertising. Advertising fees have decreased due to the number of subscribers.
- The top VOD platforms by number of subscribers, not including Hulu, are Netflix and Amazon Prime. Disney+ is a platform to watch as it is expected to launch with over 54 million subscribers.
Proposed next steps:
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We propose further research to identify and analyze 3-5 additional marketing challenges faced by Hulu. For each, we will determine why it is a challenge and any plans by Hulu to overcome it.
In addition, we propose further research to explore Hulu's ad platform including how it has changed over the last five years and any major sponsors.
Finally, we propose further research to explore the competitive landscape of Hulu, Netflix, Amazon, and Disney+ including number of subscribers over the last 5 years, business model (i.e. how it generates revenue), cost to advertise on the platform, pricing strategies, and competitive advantage. Since Disney+ will not launch until November 2019, data will come from speculations concerning the service.