Hulu Business and Revenue Model: How Does It Work and Make Money?

Paresh Sagar
blog updated dateUpdated Date: Apr 25, 2024

Hulu Business and Revenue Model: How Does It Work and Make Money

When it comes to entertainment, VOD contents via OTT platforms are the first choice of people worldwide. Their increasing gravitation towards on-the-go services has led many startups and entrepreneurs to explore online video streaming services’ potentials.

And, when it comes to online video streaming services, Netflix, Amazon Prime Video and Hulu, among a few others, are gaining momentum. While Netflix and Amazon Prime Video are the inspiring stories to follow, Hulu is born out of a well-thought idea of the top entertainment magnets.

So, if you are looking to start one such platform, exploring the Hulu business model should be your first call. The reason we suggest Hulu to startups and entrepreneurs to take inspiration from is it became popular in a short period of time after facing intense competition with top established OTT platforms like Netflix, Amazon, etc.

We have outlined a detailed Hulu analysis, including its brief history, business model, revenue models and how it works to make billions of dollars yearly.

But, to understand Hulu’s business and revenue model, take a look at what led VOD content to gain massive attention.

Read also: 13 Premier Live Video Streaming Apps for Business

The Rise of OTT Platforms

With the high penetration of smart devices, like smartphones and smart TVs, the demand for VOD (Video on Demand) content has grown up by leaps and bounds. Binge-watching has become a new normal today, giving users new consumption habits. Indeed, it has brought fundamental changes in how online contents, including video, are sold, produced, and consumed.

Flexible packages, narrow genre choices, accessibility across all internet-connected smart devices, internet penetration, and lower subscription costs are top reasons for increasing the adoption rate.

According to a survey by the Arizona-based Limelight Networks, an average of 6.8 hours per week consuming OTT video worldwide by OTT users. However, the U.S. tops the national average with 8.55 hours per week.

The significant rise in OTT viewers has given business aspirants opportunities to make a better career in this field. Many tech giants, including Apple, are considering taking advantage of new trends. In fact, a survey on Statista says online video is turning out to be a billion-dollar opportunity.

Know more: Build Your Own OTT Platform

online video a billion dollar opportunity

Hulu at Glance: History, Revenue and Usage Statics

In the realm of entertainment and VOD services, Hulu is the name of the game, at least for domestic audiences. But do you know, it did not become popular overnight? It’s the result of its years of continuous effort, struggles, patience and strategies. Wouldn’t it be interesting to know how it was started and its success journey?

Let’s explore its brief history, earnings and market of Hulu.

Hulu History

Established in 2006 by NBC Universal executive – Beth Comstock and Jason Kilar with founding partners like AOL, Facebook, Comcast, MSN, Yahoo, and MySpace, Hulu has become one of the most popular premium video-on-demand services worldwide.

Did you know Hulu is ranked third most popular video streaming service in the United States with 26.48 million monthly active users after YouTube and Netflix with 163.75 and 46.55 million monthly active users, respectively?

Initially, Hulu started offering both paid and free streaming services to gain users’ attention across the region. Though, the free subscribers were allowed to access limited contents over a computer only. In contrast, paid subscribers could access a comprehensive library of content across all internet-connected smart devices, including smartphones, TV, and computers.

Netflix is the big name in terms of video-on-demand service started by individual entrepreneurs; Hulu is the biggest rival of Netflix started by top Hollywood giants.

The idea was so successful that they managed to raise over $100 Million in funds by 2009. With unprecedented support and an increase in the organization’s valuation, they launched Hulu Plus with a vast content library that included access to complete seasons, next-day-access to new content streamed on TV and more.

The turning point: In 2011, Hulu started creating its own content that led to a strong foundation for it to become the most popular live TV streaming service in the United States (in 2017).

Read also: How to Start your own White Label Netflix Clone App Development?

Hulu Revenue: How does Hulu Make Money?

Hulu’s primary revenue source is its video-on-demand service, accessible with or without ads at various price points. According to data online, 54% of total Hulu’s revenue comes from subscriptions, while the average subscription earns Hulu $13.51/month per paying SVoD only subscriber. At the same time, it goes upto $75.11 when included both Live TV and SVoD subscribers. Here’s a detailed analysis by Statista.

hulu average revenue per subscriber us

Source: Statista

As far as Hulu’s overall revenue is concerned, it reached 3.5 billion U.S. dollars in 2019 with $1.6 billion ad revenue.

Hulu Usage Statics

According to a 2019 report by eMarketer, Hulu captures 41.5% of total OTT viewers in the United States.

According to Statista, Hulu is estimated to reach around 40 million paying subscribers in Q1 2021 from 36.6 million viewers in Q4 2020.

number of hulus paying subscribers

Source: Statista

How does Hulu work? Business Model Canvas Explained

When it comes to video on demand, Hulu is one of the top applications that has managed to find space in smart devices of almost 80% of VOD content viewers. Unlike Netflix that forces users to get rid of cable TV channels, Hulu focuses on TV shows —known as the saviour of TV contents.

It has partnered with almost all USA’s cable networks, such as NBC, ABC, Fox, CNBC and more. With an intuitive user interface and navigation, Hulu offers perks of fruitful reasons users stay connected. The surging popularity of Hulu might have taken you by surprise, but have you ever thought about how Hulu works and what makes it so popular?

We shall decode it but first, let’s understand how users can get started and the minimum to maximum charges to join a video streaming service.

So, How Hulu Actually Works

Users need to register with the Hulu app to access contents. If users choose a free plan, then contents can be accessed using PC only, while paid subscription comes with multiple device compatibility. However, when users register in the app, a one-month free subscription is given to them.

Service Charges

Users can enjoy essential services for $5.99/month for the first year, while a premium subscription (SVoD only) will cost $11.99/month —that comes without commercials. If you want to use SVoD + Live TV, then $54.99 per month with ad and $64.99/mo without ad will be applicable.

Looking to Hire Experts to Build Your Hulu-like App?

Detailed Hulu Business Model Canvas

hulu business model canvas

What Makes Hulu So Profitable? Hulu Revenue Model Explained

We have already discussed that Hulu is not the result of an experiment, it’s a well-thought idea of top business leaders from the entertainment sector. No doubt, it went through difficult phases during its initial stage. And, paradoxically, the greatest strength it was lauded for (partnership with top leading studios) was actually proved to be a systematic failure.

Those were the matter of the past; the company made a big comeback in 2010 with Hulu Plus launching. It became a big successful step that left a question in the minds of competitors: how does Hulu make money? The company has grown to become one of the top online video streaming service providers in 2021. It makes a profit using three primary sources of revenue;

  • Subscriptions
  • Add-Ons
  • Ad-Revenue

Subscriptions Based Revenue Model

We have already mentioned that Hulu’s 54% of total revenue comes from the subscription. It offers four basic flexible subscription plans to users to choose from. Users get access to Hulu’s library of shows and movies based on their subscription plan.

Add-Ons Based Revenue Model

Every plan of Hulu comes with add-ons, enabling users to access on a pay as you go basis. That means users can access live TV, HBO, CINEMAX, etc., for an extra fee. These add-ons are small in numbers but efficiently significant contributors to Hulu’s revenue system.

Advertisement Based Revenue Model

As of 2019, Hulu had 82 million users, from which 36 million users ad-free subscribers while the rest were on ad-supported plans. The number of ad-supported users is increasing rapidly, enabling advertisers to access millions of viewers on the Hulu OTT platform. In 2019, Hulu generated 1.9 billion U.S. dollars from ads only.

Read more: ARD Mediathek Live App- A German Streaming Dienste

What Lessons Startup Can Learn from Hulu’s Success

In on-demand video streaming apps, Hulu is one of the top leaders, offering and streaming a wide range of videos and shows. Even though it went through a lot of ups and downs, its success is imitable. Here’s what you can learn from Hulu’s success;

Don’t Wait for Success —Achieve It Tirelessly

Good things never come to those who wait for them; instead, it comes to those who work tirelessly to achieve them. Hulu is a recent example of it. There were times when Hulu stock plummeted significantly, causing severe loss to the company. But, Hulu strategy and its continuous effort brought it on track. Manage legacy products, but keep working on new solutions based on the trend and demand.

Explore Ways to Add Value —Value Sells

If you could remember, Hulu has gone through many transformational changes since its inception. Hulu keeps trying to put all its effort into adding value to its content. That comes out of how much you know your customers. The more you know about your customers, the better the additional value you can provide to your users —much of its credit goes to Hulu market strategies.

Never Take Disruption for Granted —It Harms, Sometimes

Disruption is risky, and you can benefit from the Hulu initiative. With the rise of Netflix, everyone started talking about cable TV as old school, but Hulu came as a savior and partnered with all top cable TV providers to bring it back to the people who adored it. The one thing the Hulu team kept in mind is that disruption can never be easy.

Growth isn’t about Expansion —Think Globally, Act Locally

When the entire OTT platform kept expanding, Hulu was functional in the United States only (no doubt, it also considered expanding its services on international platforms). But, offering services to local audiences proved to be a masterstroke for Hulu. Netflix, the biggest competitor of Hulu, expanded its services across global platforms, but experts call it a primary reason behind losses.

Focus on Both Customers and Revenue System —Success is Revenue

Customer is the backbone, while revenue is a lifeblood. Hulu offers both ad-supported and Ads-free VOD content, unlike Netflix that offer ad-free streaming services. It is continuously growing while Netflix is reported to be facing trouble. It remains strict with its revenue system, whether it is to generate revenue from monthly subscribers or ads or add-ons.

So, these are the brief ideas and information about how Hulu works that include the Hulu business model, its revenue system and lessons we can learn from.

So, are you all set to create your own OTT platform?

The idea is extremely fruitful, but you have to take a serious consideration from the technology front —that is, develop Hulu like applications.

The next big thing that comes out of the entire story is;

  • Whether to create an app from scratch
  • Or, go with a Hulu clone app

The simple answer to this question is;

If you are financially equipped and have a well-planned business idea, then both developing an app similar to Hulu and going with a Hulu clone app should be your choice.

Developing an app from scratch will cost you both time and money, though you can expect a robust solution, if you have a reliable development partner.

But, if you are a startup with a low budget, then entering the entertainment market with a clone app can be the best choice.

Cost to Develop an App Similar to Hulu

Ready Made Hulu like OTT Solution

It entirely depends on where you get it developed and the Hulu app development company. That means the company you partner with.

If you are developing a Hulu app from scratch in the countries like the USA, the UK, Canada, or other European countries, then you may have to spend around $50,000 to $250,000, while for a Hulu clone, you may have to pay anywhere from $80,000 to $100,000.

You can get Hulu apps from scratch developed for $20,000 to $80,000 in South Asian countries like India. If you go for the Hulu clone app, then the price would significantly drop to $8,000 to $50,000, provided that you are connected with a reliable app development company.

So, if you face any perplexities to find the perfect company to serve your needs, then we can be your destination.

We can help you get the perfect, reliable, and affordable app for your online video streaming business initiative. Get your Hulu Clone App, Now.

Conclusion

The increasing gravitation toward over-the-top (OTT) content simultaneously enables users to eliminate geographic restrictions and broadcast schedules and cables. Though starting an OTT platform takes a lot of effort, planning, and funding. Brainstorm your ideas and begin with planning and procurement, leaving the Hulu app development upon us; we provide excellent products.

FAQs

1. Is developing a Hulu clone app possible? Or, Is the clone app legal?

Yes, it is.

Usually, various development companies keep ready-to-deliver white-label products similar to top popular brands with similar features. If you are looking for Hulu for business, you can own it and get it personalized without any legal restriction. The development company will customize the clone app as per your needs and demand.

2. How many apps do I need to make for starting an OTT platform?

You need to create a single app for cross platforms, such as Android and iOS. If you create an app using native technology, then two separate apps are required for each platform. However, if you want cost-effective development solutions, then developing apps using hybrid technology is the way. A single application can run across both iOS and Android platforms.

However, there will be an admin panel that you will get along with your app. Besides, it’s different from other apps such as Uber for Truck, Uber of Lawn Care (you need to build two apps —one for customers, the other for service providers, separately). You don’t have to face such circumstances in this case.

3. How to build an OTT app in 2021?

If you have an app idea, connect with an app development company, they will guide you through everything. However, you need to research to find the best and reliable app development companies. A good company helps you successfully execute your plan and bring it to life.

Paresh Sagar
Author
Paresh Sagar, the innovative CEO of aPurple, is renowned for his passion for experimenting with new business models, technological aspects, and software solutions. His knowledge and insights are a must-read for entrepreneurs, tech experts, and avid readers alike, offering valuable perspectives on the ever-evolving landscape of business and technology. With a keen eye for innovation and a dedication to sharing his expertise on business digitalization, Paresh continues to inspire and inform professionals across the globe.

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