Sep 5, 2015

Hulu’s Double Whammy

Originally published at TDG Research on September 3, 2015

Hulu made two very big moves this week, building on the momentum it began earlier this year when it announced an original content play along with a multimillion dollar deal to stream the Seinfeld catalog.

The first bombshell dropped Monday, when Epix confirmed it was leaving Netflix for Hulu, giving the latter a deep catalog with a wide array of popular current movies. The second came yesterday, with Hulu announcing a $12/month ad-free option in addition to its current $8/month ad-supported SVOD service. (But seriously — is anyone really not going to pay an extra $4/month to avoid commercials?)

Together, these changes signal a newer, stronger, more vibrant Hulu. But, as some have asked, might Hulu’s $12/month price tag be a bit much for prospective customers currently paying $8/month for Netflix or slightly more for Amazon Prime, a service that also includes free two-day shipping on thousands of items?

The answer is ‘maybe’— it all depends on how Hulu decides to market itself. It has all the pieces in place to make subscribing a no-brainer. Now it needs to get the right message out.

Some Strong Selling Points
Hulu has one big advantage over its rivals: the current seasons of shows from NBC, ABC, and Fox. Having three major networks as parents gives Hulu exclusive rights to their current season series, while Netflix and Amazon typically only get shows from previous years.

Hulu needs to make potential subscribers aware of this difference, along with talking up its new movie catalog (featuring hits like Mockingjay and Star Trek) and its slate of original content from names like Amy Poehler and James Franco. Factor in the new ad-free model and this should prove to be a very compelling proposition, both for those without pay-TV (who can still keep up with current network series) and for those without it (who don’t ever have to worry about missing an episode).

Moving Forward: New Features We’d Suggest
While Hulu’s offering is currently quite strong, there are things it can do to make the service even more compelling.

For starters, it should take a page from Amazon, who this week announced that both iOS and Android users would be able to ‘offload’ shows (i.e., download shows for offline viewing). That will likely prove a highly popular feature with commuters and road warriors. While rights issues may hold things up, we believe having the feature is definitely worth pursuing. It’s a huge benefit for users and, if Amazon is offering it, there’s a good chance Netflix will follow suit. Hulu cannot afford to be the odd man out.

Second, Hulu should introduce an auto-play option, so that when the user launches Hulu, a show immediately begins to play. That decision can be based on a user’s viewing history and the program they were watching the last time they had the app open. It’s a feature that may not appeal to all viewers, so it’s best to make it optional. That said, if Sony Crackle’s experience is any indication, the feature should prove popular with the majority of Hulu users and create an experience that feels more like ‘watching TV’ than ‘watching TV on an app.’

Finally, Hulu should give users the ability to create personal accounts for each member of the family. Not only will that help improve the user experience (e.g., parents won’t get children’s shows as suggestions), it will also allow Hulu to collect better data about both it’s users and its original programming; data that can then be used to better target marketing efforts aimed at attracting new subscribers.

It’s not easy to turn a company around, particularly in the television industry, but Hulu has been making all the right moves and appears to be well on its way to becoming a serious competitor for Netflix and Amazon, providing viewers with attractive additional options for OTT viewing.

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