Should Netflix Worry about Subscriber Loss amid Hulu’s Recent Acquisitions

Does Netflix need to worry after Hulu’s recent $180m acquisition of all the Seinfeld shows and the recent deal to bring its subscribers’ CBS’ Showtime for $9 a month, with shows like The Affair and Homeland?

Hulu’s $9 charge for Showtime is less than Showtime’s stand-alone service of $11 a month, which is set for availability in July. It’s also less expensive than the service offered on pay-TV like satellite and cable services, beginning around $10 a month.  Hulu has subsidized the subscription fees gap in an effort to bring new subscribers to the fold and entice its existing customers.

The Hulu-Showtime deal still demands viewers pay $8 a month for the regular subscription service. Therefore, people who just want Showtime will be better off finding another way to get the channel content.

The Showtime-Hulu deal makes a much cheaper option than pay-TV, and it does make a distinction between it and Netflix. After all, the leading Internet TV provider couldn’t do a deal such as these because it’s not set up like Hulu.

Hulu was set up in a joint venture by ABC, NBC and Fox, streaming current TV episodes to subscribers. This is something Netflix doesn’t do.  The Showtime deal is the first type of deal for Hulu and could become the Holy Grail for people looking to cut the cord.  While HBO would be the grand prize in premium networks, Showtime comes in second place with its firm bundle of original programming.

When it comes to who is doing better in terms of subscribers – Netflix has 40 million subscribers domestically compared to just nine million for Hulu. Showtime has about 23 million subscribers in the pay-TV sector. Determining how many current Hulu subscribers will add the Showtime service to their package is going to be tricky.

How Does Netflix Fit In Here?

Although Hulu is making a huge play in the streaming service industry, especially with the addition of the Seinfeld and Showtime deals, it’s not likely to affect Netflix.  Reed Hastings, Netflix’s CEO, has repeatedly said the company’s key competition is actually linear TV – satellite and cable – not streaming services such as Hulu, Amazon, etc.

Hastings has applauded these services, and say they actually provide a great value to traditional pay options. He said the drop in traditional pay-TV actually helps Netflix along with the other companies.

The number of subscribers for Netflix, Hulu and Amazon have increased, vindicating Hasting’s theory. He said with nearly 100 million subscribers, the real prize in the battle is to defeat pay-TV.  It would seem that the streaming services aren’t going for each other but the cable companies.

Hulu is not like Netflix for two key reasons:

  • Hulu shows ads; something Netflix doesn’t do. Hastings has said Netflix users do not want ads.
  • Hulu focuses mainly in current TV shows. Netflix has an array of its own programming and a bigger library of movies.

It boils down to complimenting each other. Will Hulu get more subscribers from their recent deals? No doubt but it won’t be a disaster for Netflix.


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One Response

  1. Peter October 10, 2015

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