You’ve likely read the facts: Hulu announced that it has 25 million subscribers and collected $1.5 billion in advertising revenue in 2018. (For more information and analysis, check out this report.) The eye-catching comparison is that Hulu now has more subscribers than any traditional pay TV provider, such as Comcast with just under 21 million subscribers and AT&T’s DIRECTV satellite service with over 19 million.

But this isn’t a story of streaming replacing traditional TV services: True cord cutting remains rare, and consumers are actively “cord stacking,” adding streaming to their linear TV service. Forrester Analytics’ Consumer Technographics® data shows that subscriptions to traditional TV services among streaming subscribers are only 7% below traditional TV subscriptions among the online population. And the number of hours people watch OTT continues to lag linear TV.

But these results do tell at least two stories about the digital disruption of the media business.

Hulu’s Turnaround

Not long ago, Hulu was seen as an also-ran, perhaps headed for irrelevance. In 2015, as Netflix’s subscriber numbers crashed through the 40 million mark, Hulu struggled to get out of single digits. In fact, Hulu’s 2018 8 million net subscriber additions are just a shade below the entire 9 million subscribers the service had in 2015.

Consumers Embrace Multiple OTT Services

I believe it also signals an inflection point in consumer video habits. Before Netflix, one company provided all your daily video entertainment content: your cable/satellite/fiber TV service. Given the size of this bill, the question was whether consumers would be willing to pay even more. Once Netflix dispatched that notion, the question has become how much room exists in consumers’ video viewing habits — and budget — for more than one streaming service. Even the powerful HBO brand has only acquired 5 million subscribers. But Hulu now shows that with a differentiated content offering and compelling original content, a streaming service can earn a place in the video smorgasbord that consumers now choose from.

Two Questions To Watch In 2019

If this truly is an inflection point, this year should reveal new insights into the following questions:

  1. How many of these content relationships will consumers be willing to embrace? Consumer Technographics data shows that today, only about one-quarter of people who subscribe to any streaming service have more than one. With Hulu ascendant and the launch of services from Disney and WarnerMedia coming later in the year, a lot will be riding on this answer.
  2. Will this “cord stacking” continue? Or will consumers reach a threshold where they can fill their video viewing hours from their multiple streaming services, amplifying cord cutting from its current trickle of defections into a flood?

But it is also an inflection point for advertising. For a point of comparison, Hulu’s $1.5 billion in advertising surpasses top-tier cable networks including HGTV and the Food Network, which in 2017 each had ad revenues of under $1 billion. Advertisers who have ignored OTT advertising because it didn’t have scale must clearly change their tune and find a place in their 2019 video advertising budget for streaming.

As they say in the TV business, stay tuned for the next exciting episode! I certainly will be!