Hulu’s ad-supported tier is getting cheaper. The streaming service is rolling out a discounted annual payment plan for its current customers.
The plan, which is available starting today for existing ad-supported viewers, costs $59.99 for a year, instead of the $71.88 that ad-supported viewers would pay under the usual monthly plan of $5.99 for 12 months. That’s a 16% discount compared to the monthly rate.
The discounted rate is only available to current Hulu customers locked in to the ad-supported option, the company said, although the annual payment option will become available for new ad-supported subscribers later this year.
There’s no stated plan to roll out an annual discount to ad-free viewers, who pony up $11.99 a month to watch Hulu without advertising, and a Hulu spokesperson did not immediately respond to a request for additional information.
Discounted annual subscriptions are one way that streamers like Hulu are keeping customers engaged for lengthy periods of time. Hulu’s sister streamer, Disney+, offered up steep discounts before its November premiere if customers signed on for three years of the service up front. Other companies, including Peacock, offered 40% discounts if consumers signed up for an annual plan to its premium tiers instead of paying monthly.
Those annual plans can be valuable for streamers that are hoping to reduce churn, which has spiked during the pandemic, and can also free up marketing resources for streamers to focus on consumer engagement and customer acquisition.
“Shifting to annual or longer-term commitments almost always works out into a significant discount for the vendor, too,” Guy Marion, CEO of customer retention software company Brightback, previously told Adweek. “Not only do companies not have to expend resources to retain that customer, but now they are able to focus on improving the product with those retained customers.”
Not every streamer offers annual discounts: Netflix only has monthly payment options, as does new WarnerMedia streamer HBO Max.
The decision by Hulu to offer up an annual plan for some of its customers comes as the service increasingly advertises its less expensive ad-supported tier, which already makes up about two-thirds of its base. It also comes as partial parent company Disney has marketed a Disney+ bundle, which includes Disney+, ESPN+ and the ad-supported tier of Hulu for $12.99 a month, an even bigger discount.
The Disney+ bundle is not presently offered at a discounted annual plan.