Hulu Plus cuts price by 20%. Is it cheap enough?

By Kevin Kelleher
November 17, 2010

Did you sign up for Hulu Plus during its trial run? You may want to ask for a partial refund.

Hulu Plus, the online video service’s premium subscription plan, offers web potatoes deeper access into its inventory of movies and TV shows. The service saw its official launch Tuesday, and the finished product is apparently worth 20 percent less than the beta version. The company cut the monthly subscription rate to $7.99 a month from $9.99 a month now that the premium service is ready for prime time.

Hulu is clearly cutting is price to compete with Netflix, which has been offering a streaming video only subscription for $7.99 a month. But for that fee, Hulu Plus subscribers still have to watch commercials. And the selection of movies is inferior to that on Netflix.

The three most popular movies on Hulu today are Visioneers, Pieces of April and Christmas in Wonderland. On Netflix Watch Instantly, the top three are The Curious Case of Benjamin Button, Iron Man and The Proposal. For most movie fans, there isn’t much of a choice there.

But Hulu is doing something right. CEO Jason Kilar recently said revenue would rise to more than $240 million this year from $108 million in 2009. In 2008, Hulu’s revenue totaled $25 million. So the company is growing rapidly, even if its revenue is dwarfed by Netflix’s estimated $2.2 billion revenue for 2010.

Netflix’ size gives it an advantage in talking with TV networks and movie studios about deals for its streaming service. This summer, Netflix CEO Reed Hastings said the company was planning to expand its roster of TV shows available on Watch Instantly, having added shows from Fox, MTV Networks and Warner Television.

“At this point we can start to afford some major TV shows and movies on an exclusive basis, and plan going forward on a mix of more-expensive exclusive content and lower-cost non-exclusive content,” Hastings said in a release discussing second-quarter earnings. If Netflix gets its way, Hulu may have to lower its subscription yet again to keep its customers happy.

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Thanks for letting me know, as I was debating if I should cancel my Netflix and move to Hulu, but since I’ve heard that their movies are inferior Netflix and I can’t deal those commercials.

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