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Hulu Starts a Commercial-Free Option to Rival Netflix and Amazon
Hulu is expanding its original programming, including the next season of “The Mindy Project,” starring Mindy Kaling.Credit John P. Fleenor/FOX

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Hulu announced Wednesday that it was starting a commercial-free version of its streaming service, costing $12 a month, in its latest effort to enhance its offerings and become a stronger rival to Netflix and Amazon.

To date, Hulu has stood as the exception among the prominent subscription-based streaming services because it included commercials that could not be skipped, even for its pay service.

In the fierce competition for streaming subscribers, Hulu hopes it will lure more people to sign up by offering both a cheaper ad-supported and an ad-free option, said Mike Hopkins, Hulu’s chief executive.

Hulu has about nine million subscribers, less than a quarter of Netflix’s 21 million paid subscribers in the United States.

“You can split people into two categories: ad avoiders and ad acceptors,” Mr. Hopkins said. “There are clearly people who just are not going to buy Hulu because there are ads. We think we can bring them back into the fold with new content and this new choice.”

Indeed, soon after Hulu started streaming episodes of “Seinfeld,” viewers used social media to complain about being forced to watch ads in order to watch the classic comedy series. Mr. Hopkins said the company noticed.

As of Wednesday, Hulu subscribers can choose to pay $8 a month to watch its television shows and movies with commercials or, for an additional $4 a month, without commercials. Hulu also continues to offer a free service for viewing some programs on computers and certain mobile phones.

For comparison, a Netflix subscription starts at $8 a month and offers commercial-free viewing. Amazon, which also does not display commercials during its video streams, offers television shows and movies as part of its $99-a-year Prime subscription, which includes free two-day shipping on purchases of goods.

Mr. Hopkins underscored that Hulu was not exiting the advertising business and would continue to invest in targeting technologies that deliver viewers personalized commercials that match their interests. The $4 price differential between the subscription options aims to find a balance high enough to justify the loss in advertising revenues but low enough that people will subscribe.

“Consumers are asking for more choice,” Mr. Hopkins said. “One thing that they really wanted us to do is give them some choice around advertising.”

It has already been a busy year for Hulu, during which it has bolstered its roster of film and television offerings and expanded distribution. Mr. Hopkins started as chief executive in 2013, after its owners — Walt Disney, 21st Century Fox and Comcast — announced that they were scrapping plans to sell the site and instead investing $750 million of cash into the service.

Recent developments signal that Hulu’s owners think of the site as a defense against the rise of Netflix and Amazon, which have contributed to sharp TV ratings declines, some media industry analysts have said. Building a stronger streaming competitor of their own could help traditional TV companies fight back.

Just this week, for example, Hulu announced that it had landed a streaming deal with the premium cable network Epix to bring films including “Hunger Games: Catching Fire,” “Transformers: Age of Extinction,” “Teenage Mutant Ninja Turtles” and “The Wolf of Wall Street” to the service. (Previously, Epix had an agreement with Netflix.)

That followed Hulu’s streaming deals for televisions hits including “Seinfeld,” “Empire” and “Fargo,” as well as with the networks AMC, FX and Turner. Hulu also has ramped up its investment in original programming, including “11/22/63” from Stephen King and J.J. Abrams, about a time traveler who tries to stop the assassination of John F. Kennedy; Amy Poehler’s comedy “Difficult People”; and the next season of the comedy “The Mindy Project.”

Hulu also has struck deals with cable companies such as Cablevision and Charter, which resell the service to their customers.

“We knew that we had to make a lot of investments in content so that we could stand apart and make some headway against the competition,” Mr. Hopkins said.

Read more http://rss.nytimes.com/c/34625/f/640387/s/498363fb/sc/28/l/0L0Snytimes0N0C20A150C0A90C0A30Cbusiness0Cmedia0Chulu0Estarts0Ea0Ecommercial0Efree0Eoption0Eto0Erival0Enetflix0Eand0Eamazon0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm


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