The Great Streaming War of 2015: Hulu Introduces Ad-Free Option

When Amazon announced yesterday it was introducing offline viewing for Prime Video, and called Netflix out in its statement, we assumed it was Netflix who would fire back first with some sort of new feature. But no, it was Hulu—which only has about 20 percent of the paying subscriber base of those two—that debuted its new ad-free tier for the not-so-low price of $11.99/mo.

For those counting, that’s three tiers for Hulu: The regular, free, advertising-supported version; the “Limited Commercials” version that’s $7.99/mo and boasts a slightly fewer ads; and now Commerical Free Hulu, which dispenses with ads altogether except for seven shows (including Scandal, New Girl, and Grimm) that will have a 15-second pre-roll and a 30-second post-roll spot.

The move comes just a few days after the streamer added to its steadily growing film library by signing a deal with Epix, the movie channel cable providers love to use as a “Free year-long subscription!” promotional tool.

While a $4 hike might seem steep, even if it does mean not having to sit through ads, Hulu CEO Mike Hopkins appears to be bullish on the new offering. He may be right: Netflix Ted Sarandos told us that consumers are so fed up with cable companies they’ll pay just about anything to get away from them.

On the other hand, FX Networks CEO John Landgraf took the opposite view in our interview last year:

“If you went to the whole of America and said, ‘You can get all this content for $100 a month and watch no commercials, and you can get all this content for $50 a month and watch commercials,’ I think you’d be shocked by how many people would take the $50 option. There would certainly be 20 or 30 percent of the people in America who would take the $100 option, but I think you’d be shocked by how many people would take the $50 option. Most of them because they didn’t want to spend the extra $50, but some of them because they want to watch the commercials—as crazy as that sounds. We live in a world where people are really busy and really jaded—I mean, I don’t want to watch commercials. But I’m shocked by how many people do, even on the DVR.”

Rather than major cost jumps, then, tiering lets providers in The Great Streaming War offer extras for smaller price increases—that can still add up. Hulu also offers the addition of Showtime’s OTT service, which means you can plunk down $21 in just one place for all your streaming demands. Unless you want to watch Fear the Walking Dead live, then you’ll have to get Sling for $20/mo. And you like Game of Thrones, too, so you add on HBO Now at $15/mo. And then… Well, you get the picture.