An ad-free Hulu? Too little, too late

Late last week, rumors emerged that Hulu was considering adding an ad-free option to its streaming service.

The Wall Street Journal, citing unnamed sources, said Hulu could debut the service later this fall, with a price of between $12 and $14 per month, more than Netflix, Amazon Prime Instant Video, Showtime and in line with HBO Now.

Hulu already operates a paid tier (originally known as Hulu Plus, an $8 a month service) and a free, Basic Hulu.

The paid service offers an expanded content base that also carries a lighter ad load than does basic Hulu, usually two 30-second ads compared to three 30-second ads for Basic.

Subscribers to what was then known as Hulu Plus have, since its inception, complained that they shouldn’t have to see ads for a service they pay for, demanding more of a Netflix or Amazon Prime Instant Video experience.

Hulu, under the leadership of new CEO Mike Hopkins, appears to be ready for change. Whether the ad-free service replaces or comes on top of the current paid and basic model isn’t clear, nor is it guaranteed that the rumors of an ad-free service are true.

But Hulu needs to change to move forward.

Launched in 2008, Hulu to date has, essentially, been left behind by Netflix and even Amazon, which launched in 2011.

While Netflix has topped 65 million subs, and Amazon Prime gains speed, Hulu has yet to reach 10 million, although new CEO Mike Hopkins says the service has increased from 6 million subscribers to 9 million this year.

While Hulu is a member of the Comcast/Disney/21st Century Fox family, but it’s often been treated as an unwanted stepchild. Rumored to be considering an IPO in 2010 that never materialized, it’s also been openly up for sale at least once, but the uncertain future of its programming deals with its parents have made it a tough sell.

Hulu and its owners have often had a rocky relationship, as evidenced by a 2011 blog post from then-CEO Jason Kilar. In the post, Kilar criticized the business models of traditional TV companies, saying “traditional TV had too many ads,” and noting that “consumers want TV to be convenient for their schedules.”

And, he said, traditional, non-targeted ad buys resulted in “many wasted impressions and an often irrelevant experience for consumers.”

Sound familiar?

Disney, at the time, distanced themselves from Kilar’s POV, saying his opinions were “personal and clearly not shared by anyone at Disney.”

Now, however, as Hulu chases the leaders, it’s obvious that it’s time for Hulu to roll out that ad-free option.

But, is it too late to catch up?

In a word, yes.

Hulu is destined to be Netflix’s – and possibly Amazon’s – little brother.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn