Hulu and the case for hybrid ad-supported SVOD

Launched in October 2007, 10 months after the launch of Netflix’s streaming video service (until that point, Netflix had been a mail-order DVD subscription business), Hulu united Comcast 21st Century Fox, Time Warner and Disney to act as a TV network hedge against the disruptive impact of subscription video on demand (SVOD) in the US. In 2010, Hulu became the first streaming service to add “Plus” to its name when it launched a subscription service, initially branded as Hulu Plus, which featured full on-demand seasons of programming from its stakeholders and exclusive streaming access to new episodes. In 2016, Hulu closed down its free-ad-supported TV (FAST) access and focused on an ad-supported hybrid SVOD model and an ad-free tier, which launched in 2015 In 2017 respectively. The company launched Hulu with Live TV—a premium streaming TV tier featuring linear television channels, news, sports, and live advertising. In 2019, Hulu publicly revealed that 70% of its engagement was coming through its basic ad-supported subscription tier. 

Almost by stealth, Hulu has grown from being a defensive afterthought of legacy media majors into the third largest SVOD service in the US, with 46.2 million subscribers as of July 2022 (it has remained US-focused despite a brief expansion in Japan, which ended with Hulu selling the subsidiary to rival Nippon TV in 2014).

Disney is now in overall control of Hulu; since its March 2019 acquisition of 21st Century Fox’s 30% stake and AT&T’s sale of the Time Warner 10% stake a month later, Comcast has agreed to sell its remaining 30% stake to Disney by 2024. This is after also agreeing to relinquish active control in May 2019. A Disney-controlled Hulu is now being actively promoted as part of Disney’s D2C pivot, with a Disney+, Hulu, and ESPN+ bundle as part of a long-term push to make the hybrid SVOD / Live TV Hulu platform the likely focus for Disney’s streaming TV hub strategy once full control is realised.