Following Netflix Price Hike, Hulu Drops Cost For Ad-Supported Tier

Hulu will raise price of live TV packages, but lower the cost of basic streaming

Hulu Is Dropping Basic Prices Just After Netflix Announced An Increase

The new price is comparable to a basic plan from Sony's rival PlayStation Vue, but more expensive than Google's YouTube TV and AT&T's DirecTV Now. That doesn't bode well for Netflix if true, as the service is still offered at an unsustainably low price given the cost of producing high-quality original series and films in the volume that Netflix needs to achieve its long-term goals, not to mention steep licensing fees for third-party programming.

Hulu's ad-free tier will still cost $12 per month.

Hulu debuted its live-TV streaming service in 2017 and says the price increase represents the value of channels it has added, such as the CW and Discovery Channel, as well as technology upgrades. Netflix's last rate hike in October 2017 sent the company stock up 3% for the day, according to CNBC.

Hulu has dropped the price of its cheapest package by $2 - just a week after competitor Netflix raised prices for its services. Of course, the new pricing comes with some compromises but it could help the streaming service gain some ground on its competition.

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Even though Netflix still commands a massive share of the online streaming audience - with 58 million USA customers alone - Hulu had 25 million subscribers as of the end of 2018. Hulu's announcement caused Neflix shares to fall around 1% on Wednesday.

Surveys have suggested that some consumers would consider dropping Netflix as a result of that service's price hike.

Hulu has spent the a year ago focusing on domestic subscription growth.

Fortune has reached out to Hulu for comment. It is set to become a majority owner in Hulu after its acquisition of Twenty-First Century Fox.

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Ads are annoying and not something I particularly like when I just want to be entertained, but if significantly reduces the price of entry, it certainly makes it an attractive option.

Disney executives have indicated Hulu will remain a big part in streaming strategy.

Does it matter?: Uproxx notes the Hulu jump might not matter in the long term.

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