When Hulu first unveiled its premium Plus service, many were surprised to discover the monthly fee was $9.99. The price was higher than a subscription from Netflix, which, unlike Hulu, offers ad-free streaming and DVDs-by-mail. What's more, CEO Jason Kilar even said the company was "not averse" to a pricer version of the service.
But it appears introducing such an expensive plan was never his intention—and he did whatever he could to push for more competitive pricing.
Recently, Hulu has been clashing with its owners—NBC Universal, News Corp., and Disney—and CEO Jason Kilar has even threatened to quit over disagreements negotiating the pricing of its Plus service.
The issues stem from Hulu's business model, which many on the traditional side of TV worry is cutting into revenues. By offering new content for free on Hulu, the Wall Street Journal reported Thursday, lucrative DVD sales and cable re-runs are likely to decline in value. Many of Hulu's content providers have considered pulling free content from Hulu, according to sources. Hulu management has also contemplated a major overhaul of its model, redesigning it as an on-demand and live streaming TV service.
Hulu Plus, a subscription service that offers users more access to content for a fee, was launched to address some of these issues, but has yet to allay financial concerns. Kilar, in particular, was concerned with the $9.99 monthly price, which he worried would hinder consumer acquisition from Netflix. He proposed reducing the price in half, to $4.99—a figure that soon leaked to the press. (I wonder by who?)
When arguing for the proposal with media execs on a conference call, Kilar threatened to leave Hulu over the issue.
Eventually, both sides compromised, agreeing to reduce the price by 20% to $7.99 per month—coincidentally the same price as Netflix's new streaming-only plan.