Price war? Showtime joins forces with Hulu as premium SVOD competition heats up

Hulu is continuing its bid to be a one-stop service for exclusive TV series and movies by announcing a content partnership with Showtime that will enable Hulu subscribers to sign up for the premium network's online service for considerably less than Showtime's standalone monthly rate. The move could be the first big cannon shot in a potential SVOD price war.

Hulu and Showtime team up

Hulu subscribers will be able to sign up for Showtime at a significant discount. (Source: Hulu)

Showtime is already beating HBO Now on price, offering its online service, Showtime Anytime, to owners of Apple TV, Roku or Sony streaming devices for $11 per month--less than HBO Now's $15 monthly rate. But Hulu subscribers can get Showtime for $9 a month.

Getting both Hulu and Showtime for $17 a month total puts pressure on HBO's online model, which is sold as a standalone service.

"What we're basically figuring is that by adding these two services together, we think that consumers are entitled to a discount. We really wanted to be aggressive coming out of the gate," Tim Connolly, head of distribution at Hulu, told Re/code.

So, is the low pricing a warning shot across HBO's bow? The premium network is not the only target in Showtime's sights. And it's worth noting that in Europe, HBO Nordic--the first over-the-top product offered by HBO--also delivers Starz and Showtime content, suggesting that these interesting times are making for strange bedfellows.

With Netflix (NASDAQ: NFLX) firmly ensconced atop the subscription segment of the OTT market, and Amazon attracting subscribers through its value-added Prime service, other streaming providers are increasingly battling for the consumer's third SVOD choice.

What's more, wireless providers are getting ready to jump fully into the streaming segment, with Verizon (NYSE: VZ) poised to launch a mobile-first OTT service this summer now that its acquisition of AOL is complete.

And price is certainly a factor for consumers. At the OTT Executive Summit last week, a panel of millennials overwhelmingly indicated that more competitive prices are a draw for certain types of OTT content. Older panelists between 21 and 55 years of age, agreed that $5 was an acceptable price point for HBO Now or for a celebrity's standalone channel, such as Jon Stewart. Younger millennials said they would rather watch ads than pay a subscription fee for streaming.

"I am willing to pay," said Brenda, an older viewer who participated in the discussion (last names of the consumers on the panel were withheld). "I hate the ads, especially when I'm watching a 30 minute program and see that 12 minutes are ads."

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