Hulu has partnered with AT&T to bring its subscription service to AT&T customers. The deal builds upon AT&T’s existing agreement with Hulu for its free content and allows AT&T to resell Hulu Plus subscriptions to its customers through the AT&T website and AT&T-branded mobile apps.
As with previous deals Hulu has struck with operators and pay TV providers, AT&T and Hulu have not revealed detailed pricing at this stage. However Hulu has indicated that intends to keep the $7.99 price point for its distribution partners and that they will also get a revenue sharing agreement.
AT&T is an attractive partner to help Hulu’s go-to-market growth because of AT&T’s scale in both mobile services and Pay TV: AT&T has over 120 million mobile subscriptions in the US plus approximately 6 million pay TV subscriptions. AT&T’s customer base on mobile dwarfs Hulu’s subscription base of nearly 9 million in late April 2015 increasing the appeal of AT&T to Hulu.
Previously, Hulu has been aggressive in striking deals with pay TV providers to distribute its SVOD offering and grow subscriptions: It has deals with Cablevision, Armstrong, Atlantic Broadband, Mediacom Communications, Midcontinent Communications and WideOpenWest.
But AT&T adds an intriguing mobile dimension to Hulu’s partnership. In addition to sheer scale, AT&T potentially heralds a new user experience as because AT&T intends to offer Hulu within AT&T branded mobile apps. A key area to watch as the service launches is whether these mobile apps are simply badged versions of Hulu’s existing apps, or if the Hulu service becomes integrated within AT&T’s own apps and user experience.
Hulu’s strategy follows the path of Netflix which has existing deals with several pay TV providers. But Hulu hopes to be more successful and is even indicating that it will be open to revenue sharing deals. Moving onto online pay TV platforms will expose the service to millions of potential new subscribers. The current deals with AT&T and Cablevision also open the opportunity for the service to be bundled with video products and eventually access via the set-top box.
The move to online pay TV delivery and to new mobile offerings is important because it helps Hulu’s partners to transition their existing business models into new delivery models. These partners – such as Fox, NBC, Disney, Viacom, Univision, A+E Networks, Scripps, Turner and others -- can experiment with ways to make up for lost revenue due to cord-cutting at arms length from their traditional business.
Partnering with AT&T on mobile has other benefits for Hulu. It enables Hulu to sidestep the impact of mobile data limits on Hulu mobile video adoption, because as a mobile operator, AT&T can choose what services count against such data tariffs.