Hulu’s pricing changes took hold recently, and the shift should help the platform’s advertising revenues grow exponentially over the next few years.
That’s according to eMarketer, which predicts Hulu’s gross ad revenues will approach $2.7 billion by 2021. The firm expects Hulu will tally up about $1.82 billion in 2019 (up 25.3%) and $2.24 billion in 2020 (up 22.7%) before climbing another 20.5% in 2021. The firm said its 22.7% growth forecast between 2019 and 2020 is nearly double its previous target of 11.4%.
eMarketer is attributing the increased ad revenue growth for Hulu to the service’s decision to decrease the price of its ad-supported tier by $2 per month while raising the price of its full-service plus live TV tier by $5 per month.
“In such a competitive video streaming landscape, Hulu cutting prices for its low-tier ad-supported streaming subscription will almost certainly increase viewership, attracting those who had been on the fence about having the entry-level Hulu option,” said Monica Peart, senior director of forecasting at eMarketer, in a statement.
As proof of its thesis, eMarketer cited an Interactive Advertising Bureau study that said more than half (56%) of U.S. video viewers are OK with advertising if it means paying less.
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In January, Hulu announced that it was lowering the cost of its ad-supported tier from $7.99 per month to $5.99. While the price is coming down for Hulu’s basic service tier, the price is climbing from $39.99 to $44.99 per month for Hulu with Live TV. Both of those changes went into effect in February.
In January, Hulu also announced that it added 8 million subscribers in 2018 and raised its total to more than 25 million subscribers across its SVOD and live TV services.
“Consumers have spoken loudly about their desire for more choice and control in their TV experience. They are seeing the enormous benefits of streaming, they’re deciding which content and brands are most important to them, and they’re choosing Hulu,” said Hulu CEO Randy Freer in a statement. “In 2018, Hulu led the industry in attracting and engaging subscribers, building a powerful technology stack and cultivating a brand that both consumers and advertisers love. Looking ahead, Hulu is in the best position to be the #1 choice for TV—live and on-demand, with and without commercials, both in and out of the home.”
At the same time, the company said it grew its advertising revenue more than 45% to nearly $1.5 billion and increased its advertiser base by 50%.
In addition to ad units for sale within its on-demand and linear video services, Hulu is also testing out display ads that show up when users pause videos.