Who Knew Hulu Would Evolve To Stadium Status?

June 12, 2019
June 12, 2019 Kate Neale

Who Knew Hulu Would Evolve To Stadium Status?

The Hulu Theatre At Madison Square Garden – 82 million subscribers can do that for you. It will also let you be at the pointy end of innovation in the streaming video industry.

Eleven years on from launch when Hulu subscribers were 100% desktop, their viewer’s behaviour has shifted to six percent desktop, 14 percent mobile/tablet and 80 percent in the living room, indicating the bulk of the content viewed is longer form best suited to lounge room environs.

Their pricing structure has gone from 100 percent free to 100 percent subscription, with a choice of ad supported (US$6) or ad free on demand (US$12) or Hulu with live TV (US$45) subscriptions. With 28 million subscribers (one sub equals on average four viewers) and 58 million choosing ad-supported, 70 percent of their over 80 million subscribers are compromise some ad time for dollars.

Their propensity to do this is likely in the restraint shown by Hulu in how they intrude on the viewers experience. The advertising experienced by the viewer is data driven, with a high focus on keeping the ad relevant, consistent and maintaining content quality.

Hulu has a viewer first mentality in recognition it’s too easy for a dissatisfied viewer to click away. The ads are UX driven, using addressability based on observed viewer habits, capped at 90 seconds or less subject to demand, there’s a countdown clock so viewers know when to expect the ad to end and they use conventional placement of ads ie. as per conventional TV spots.

The more viewing time the subscriber has, the more likely they are to have multiple content sources, so it’s important to be respectful of their experience and non-intrusive to maintain customer satisfaction. For instance contextually relevant content can be well received eg. offering catering/food delivery ads when the system is paused during binge watching etc. Binging is great but you gotta eat, right?

If you’re wondering how the consumer will ultimately respond to the plethora of choice in streaming suppliers, in the near future, viewers are likely to adopt ‘portfolio’ viewing, facilitated by content aggregation achieved through partnership. This will allow the viewer to seemlessly select and watch content from one or a few sources, to give ubiquitous access to content through one interface. This makes TV totally dynamic with the viewer in charge.

Recently Hulu have focussed on creating high quality content, creating originals with big names eg. Handmaids Tale, Catch 22 by George Clooney, Amy Bryant Shrill, Reese Witherspoon Little Fires Everywhere. They have 85,000 hours of TV shows a deep library shows appear online the day after they’re on broadcast or cable and they have a pretty sizable film library also.

While some old content holds timeless appeal, the ageing film catalogues have declining value in the face of multiple aggregation and the sheer volume of new content available to viewers. Sorry but you’re just not gonna watch Gilligan’s Island when Love Island is on offer!

For advertisers the ‘spray and prey’ days of advertising are over with 100 percent of the advertising being addressable and most of the ads getting to 90% completion on Hulu. They’re reinventing advertising models, for instance viewers can also be incentivized to watch ads with advertisers sponsoring the ad free viewing of content if the viewer agrees to watch a 90 second ad.

There are multiple on ramps for viewers based on the viewers ad acceptance tolerance, which is not demographically defined, it’s about the individual viewers attitude. Data informs the strategic creative so they can make situationaly relevant, timely ads that increase viewer acceptance. Their methodology and results must be working as the number of advertisers and ad revenue are both up.

Advertisers are still trying to figure out how to really capitlaise on the new viewer behaviour amid a constantly changing landscape of features provided by technology, new content offerings and a viewer who is disloyal and constantly on the move. But “The future doesn’t fit into the vessels of the past” so they’re looking for the new measurements, the new creatives and the new tactics to fit the behaviours of eyeballs they’re chasing. That’s where commercial entertainment and marketing content arises.

Among advertisers 100% have a strong interest in advertising in the OTT/CTV zone but Hulu’s Peter Naylor suggests only 60-70% of them have a firm grasp of the medium, but they’re all looking to tighten their strategy for OTT/CTV. Traditional advertisers generally have a harder time transitioning than the DTC digital native brands where the terrain is more familiar – they’re technology based but marketing lead.

The fact remains that everyone wants to tell their story with sight, sound and emotion and the easiest way to do that is with OTT/CTV, which has all the bells and whistles of social, plus the features of data and other features of technology. The comparative cost to test and learn is also way lower with CTV/OTT which lowers the barrier to entry for even the smaller businesses, those who have been excluded from traditional broadcast advertising.

Marketers have to innovate, evolve and adapt. Traditional companies can improve their position through acquisition such as Gillette acquiring Dollar Shave, which buys the business but also the intellectual property that comes with those businesses, not the least of which is their digital marketing knowledge.

While there is certainly an infinite amount of content on YouTube, in some ways it is the wild west of streaming content, where brand safety cannot be assured. Content can inadvertently find itself next to inappropriate content which in this era of opinion empowered by social media, such incidences can be catastrophic for large brands, potentially even translating into share price degradation.

At scale, streaming video platforms offer advertisers a kind of gated community to secure the environment that their advertising is presented in, and that has strong value and appeal.

Across the board, traditional media is in decline, while digital is in growth. With the transition to ownership by one company (Disney) instead of several, international expansion and more investment in content creation will continue to drive growth. With Disney, ESPN+ and Hulu in the stable, Mr Iger has a very compelling offering at his disposal.

If you would like to know where you fit in the world of OTT/CTV contact Wanted Consulting – Reward Offered.

Contact Wanted Consulting

Wanted Consulting works with executive management, usually on a referral basis. If you're seeking highly effective marketing expertise with creative and practical production skills, this is the resource you've always wanted.