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Netflix has a new nemesis as Hulu cuts commercials, hooks huge shows

hulu partners with 20th century fox ad free
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Last week, to relatively little fanfare, Hulu unveiled an “ad-free” tier that allows users to stream till their eyeballs bleed, without interruption.

While there are a few caveats — including some short ads on Grey’s Anatomy and a few other series – the implications for Hulu couldn’t be bigger. The move pushes Hulu from “also ran” into an elite circle of players offering infinite binging, on demand, with no ads attached.

With fresh shows from all the big networks, solid-gold classics like Seinfeld, and original shows like Difficult People that are gaining cachet online, Hulu has been piling up plenty of promise. But now it’s the only service offering new seasons of scores of major series right after airing, commercial-free. That’s kind of a big deal. And competitors like Netflix and Amazon should take notice.

The red menace

Netflix remains the undisputed heavyweight champion of streaming, and Hulu’s biggest competitor. It wrote the playbook when it comes to creating a viable alternative to basic cable when it started streaming online back in 2008. Since then, Netflix has amassed an unparalleled arsenal of movies and popular series from across the globe. Today, it spends more on content than some major TV networks, to a tune of around $5 billion per year.

As more and more viewers drop cable, there’s plenty of room left for the expansion of new streaming empires.

Netflix also reaches more viewers than anyone else. It has over 65 million global subscribers today, but continues to grow so fast that it plans to hit 100 million by 2017, in 200 countries. Hulu has a mere 9 million, a pale green glow beside Netflix’s blaze of red.

And when it comes to usage, Netflix is like Mike Tyson in his prime — on PCP. The service accounts for around 36 percent of all streaming traffic in North America at peak hours. In comparison, Hulu and Amazon barely even register, accounting for around 2 percent each. But the footing in today’s entertainment landscape is still taking shape. As more and more viewers look to drop traditional pay TV, there’s plenty of room left for the expansion of new empires.

A new contender emerges

Netflix may be leading, but the world of online streaming moves at its own, breakneck pace. When compared to traditional TV, watching these services develop over the last few years has been like watching bamboo shoot up beside an oak tree. Two years ago, Netflix became a full-fledged TV network; today it’s a movie studio. Tomorrow? Who knows. And Hulu may well have the same growth spurt ahead.

hulu no ads
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Hulu’s 9 million subscribers may seem relatively insignificant right now, but the company’s user base has grown by over 50 percent in the last year. That’s “break out the champagne and cigars” kind of growth.

The content wars

Thanks to the deep pockets of Hulu’s plutocratic owners like Disney, 21st Century Fox, and Comcast’s network, NBCUniversal, there’s more content coming, too.

The service has added to prized possessions like South Park and The Daily Show by acquiring new additions like the aforementioned Seinfeld catalog (for a cool $180 million). In addition, the service has begun resurrecting popular series like The Mindy Project, and signing exclusive content deals with hot networks like AMC, which carries, among other things, ratings powerhouse The Walking Dead, and its popular new spinoff series Fear the Walking Dead. And that’s just within the last few months.

Original programming and resurrected favorites ignore Hulu’s biggest draw: new seasons of top TV shows.

Hulu has also swooped in on former Netflix content as its licenses expire. A new deal with Epix, formerly a Netflix partner, adds access to a ton of movies like The Hunger Games: Catching Fire, World War Z, Star Trek Into Darkness, and others.

Perhaps most importantly, Hulu has begun to turn the tide on original programming. After swinging wide with critical duds like Deadbeat and Quick Draw, Hulu’s new Amy Poehler-produced series, Difficult People, is turning heads. The brilliant, and wincingly hilarious show is a hit with critics and audiences, and could be a sign of more to come.

When it comes to creating quality original series, the momentum seems to snowball as more Hollywood players start taking note, and jumping on board. All it seems to take is one House of Cards, or Transparent to start bringing in the talent. Next on the docket for Hulu is an intriguing new sci-fi series about the assassination of JFK from JJ Abrams and Stephen King, called 11/26/63. Could this be Hulu’s breakthrough drama? It’s hard to predict, but there haven’t been many projects that have avoided the Midas touch of Abrams’ powerful production company, Bad Robot.

The shows you know

Original programming and resurrected favorites ignore Hulu’s biggest draw: new seasons of ratings-rich TV shows. Subscribers get access to cable and broadcast favorites like Last Man On Earth, Rick and Morty, Modern Family, Empire, Brooklyn Nine Nine, and others, often just a day after air. That’s in addition to talk shows like The Daily Show, and The Tonight Show, as well as all the reality TV you can stomach.

Many of these shows can be accessed elsewhere, but not ad-free, as Hulu now offers. For the price of a latte, current paying subscribers can now upgrade to the equivalent of having a massive DVR loaded with the hottest shows, with no fast-forward necessary. For cord-cutters, this transforms Hulu from an ad-polluted backwater to a sparkling blue ocean of content. Combine these with Netflix and Amazon, and you have access to a veritable cornucopia of content for less than $30 a month.

Worth the cost of admission

Sure, ad-free Hulu costs a little more, but that extra $4 wouldn’t even cover the fees and taxes of a bloated cable subscription — something Hulu’s owners (especially Comcast) know all too well. Essentially overnight, Hulu has positioned itself as a serious force to be reckoned with — one full of familiar content to cord-cutters coming from cable and satellite.

While Netflix grabs all the headlines, Hulu’s sleeping giant may be the one to watch right now. And we have the feeling those 9 million subscribers are about to get some serious company.

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Ryan Waniata
Former Digital Trends Contributor
Ryan Waniata is a multi-year veteran of the digital media industry, a lover of all things tech, audio, and TV, and a…
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