Challenges in Marketing to Subscribers

• Being limited to United States only, the company is restricted from accessing the global market.
• This severely restricts the company's ability to gain higher revenues and subscriber count.
•  The recent acquisition of Fox properties by Disney resulted in Disney becoming the largest stakeholder in Hulu.
•  According to many sources, Disney plans to make Hulu an international platform.
• The company recently announced a bundle plan of its three streaming services — Disney+, Hulu, and ESPN+.

• A recent survey from Magid revealed that "roughly 35% of all young consumers share their passwords."
•  According to the survey, they share passwords at a rate of 42%.
• This, in turn, hurts the business model and the monetization of the premium services provided by the platform.
• It also recedes the subscriber count growth.
• The challenge is equally affecting other streaming services in the market, like Netflix, HBO, and other pay-TV services.
• There are no current plans by the company to overcome this challenge.

Challenges in Marketing to Advertisers

• For years, Hulu had a limited ad inventory available for its advertisers.
• In the past, Hulu limited its ad inventory so that its platform does not get overrun by ads.
•  Advertisers see Hulu as a very favorable OTT ad platform, as they consider it to be sure and certain.
•  According to Kristin Scheve, svp and media director at Digitas, Hulu "is a trusted one-stop shop to get premium content in a premium TV-like environment."
•  The company recently increased its ad inventory, in light of its growing ad-supported subscriber base.
•  Quoting Christine Peterson, U.S. digital investment lead at Mindshare North America, "Earlier over the past year, we were having more challenges with inventory availability, but Hulu’s made some very smart strategic moves in how to continue and increase their distribution, increase their consumer base and make more inventory available."

• Hulu recently limited the ad interruptions on its platform to 90 seconds.
• The move effectively removed " half of the commercial time that had previously run in its programming" as reported by Ad Age.
• The company has been enforcing the ad cap since early 2019.
• However, it officially informed its participating networks (including NBC, Fox, Turner, and Viacom) about the ad capping in April.
• The company's move is considered to be unpleasant to its ad partners, who up till now had been able to mostly control their ads.
• To attract advertisers, Hulu is testing and planning several innovative methods of ad presentations.
• Its recent "pause ad" feature was tested on a pilot with Coca-Cola and Procter & Gamble's Charmin.
• The company is also testing better ad analytics to provide advertisers with "more granular data on the viewers watching ad-supported content."

RESEARCH STRATEGY

Ad Revenue

• While Hulu hasn't noted any profits in the past few years, its revenues for the last five years have been steadily increasing.
• Its ad revenue for 2016 stood at $872.8 million and was projected to reach $1.114 billion in the next two years.
• However, its ad revenue gained an even bigger spike, rising to nearly $1.15 billion. According to earlier projections by eMarketer, it was not expected to reach this amount before 2020.
• According to current projections by eMarketer, its ad revenue will increase to $1.82 billion in 2019 due to an expected increase in subscriber count.
• The ad revenue is poised to grow to $2.24 billion by 2020.

Subscribers

•  In 2015, Hulu had an approximate 6 million subscribers.
• The subscriber count for Hulu has been growing since, reaching 25 million subscribers by the end of 2018.
• In May 2019, the company released an estimate of the total number of subscribers to its platform. The total number of subscribers stood at 28 million by May 2019.
• Hulu offers 2 different subscription models, with one being ad-free (offered at $11.99 per month) and other being ad-supported (offered at $5.99 per month).
• Around 70% of its subscribers come from its ad-supported plan.
• According to the company release, there are 2.9 viewers on average per subscriber account.

Sponsors and Advertisers

•  Some sponsors and advertisers on the platform include Hotels.com, Amazon Alexa, Coors Light, luxury consignment site The RealReal and Toyota.
• The company has been testing "pause ads" on its platform as of recent, in which it piloted the ads of Coca-Cola and P&G’s Charmin.

Sources of Funding

•  Hulu receives most of its funding from its advertisements.
• As noted earlier, the company estimated its ad-supported subscribers to account for 70% of total subscribers.
• The ad revenue earned by Hulu was $1.15 billion in 2018, which was 45% higher than the previous year.

Comparison to Competitors

• While Hulu reached 25 million subscribers in 2018, its competitor Amazon Prime reached 26 million subscribers.
• Netflix still stands as the market leader with 60 million US subscribers and 148 million subscribers in total.
• The three companies together account for 60% of streaming time.
• While Hulu's subscriber count increased by 47% in 2018, Netflix's subscriber count grew only by 26% (with a 12% decrease in US subscriber counts) in 2018.

RESEARCH STRATEGY