Brief:
- Spotify is offering its U.S. paid subscribers access to Hulu's video on-demand platform for no extra cost if they sign up by June 10, per a company blog post. The number of Spotify accounts eligible for the offer is capped, although the companies didn't disclose how many people are able to participate.
- Spotify Premium subscribers who respond to the offer will get access to ad-supported Hulu at a bundled price of $9.99 a month with no expiration date. The companies a year ago had bundled Spotify Premium and Hulu for $12.99 a month, a price that will be reinstated after June 10.
- Subscribers who now pay $12.99 a month for last year's bundle offer will see an automatic price cut to the regular Spotify Premium price of $9.99 a month during the promotion period.
Insight:
This latest partnership demonstrates that Hulu is willing to give away its ad-supported service for free as the company tries to build a loyal user base and compete with Netflix and other streaming rivals. Hulu last month lowered the price of its ad-supported plan from $7.99 to $5.99 a month, while raising the price of its TV service from $40 to $45 a month, Variety reported. Spotify also bundles ad-supported Hulu and Showtime in its special $5-a-month Premium for Students plan in the U.S.
Hulu said its subscriber base grew 47% last year to more than 25 million. By partnering with Spotify on a bundled offering, Hulu can reach a tech-savvy audience of people who are more familiar with streaming technology than the general population. Growing its audience could help Hulu nurture a loyal user base and appeal to major advertisers that have shifted their ad budgets to digital giants like Facebook, Google and Amazon.
For Spotify, the free Hulu deal is another effort to grow its user base. The service had 207 million monthly active users, which includes 96 million premium subscribers and 116 million ad-supported users, as of its lastest earnings report. The Hulu deal and Spotify's recent acquisitions in the podcast space could help the service attract both paid and ad-supported subscribers as it faces competition from several other services, such as Apple Music.
The streaming space is growing increasingly crowded for both Hulu and Spotify, with tech giants like Apple and YouTube expanding their on-demand programming and media stalwarts like Disney readying the launch of a streaming video service this year. Meanwhile, media companies continue to lose viewership on traditional platforms like cable and satellite TV. The total number of pay-TV subscribers in the U.S. fell 4.1% in Q4 2018 from a year earlier. That drop was the biggest decline since the cord-cutting trend started in 2010, per data from MoffettNathanson Research cited by Fortune.
