Hulu and Spotify today announced an expansion of their partnership on discounted streaming bundles, which lowers the price of Hulu’s ad-supported service to, well… nothing. Starting today, Spotify Premium subscribers can basically tack on a Hulu subscription for free on top of their existing $9.99 per month streaming music plan. In other words, for the same price you’re currently paying for Spotify Premium, you can now opt in to Hulu.
The deal is open to both new and current U.S. subscribers, including those who previously took advantage of last year’s $12.99 per month bundle deal, says Hulu.
New subscribers also will be able to get the first month of Hulu for free, as part of a trial period, before the $9.99 per month bundle pricing kicks in. Meanwhile, existing Spotify Premium subscribers can add Hulu by visiting their Spotify account’s Services Page and activating Hulu’s ad-supported plan as part of their account.
The two companies have been working together since 2017, when they first realized the potential in making both their services available as a single, affordable subscription.
Initially, Spotify and Hulu offered a discounted bundle aimed at students, which brought the cost down to $4.99 per month for both services — the same price as Spotify’s student plan. Last year, Spotify expanded the student bundle to include Showtime, and rolled out a low-cost $12.99 per month bundle for all other users. (Those promo subscribers will be automatically shifted to the new, cheaper plan.)
Hulu more recently has been focused on bringing the cost down for its entry-level, ad-supported service for everyone. In January, it lowered its pricing to $6 per month, while simultaneously raising the prices for its Live TV add-on. The thinking here is that the ad-supported version of Hulu can serve as a loss leader for Hulu’s more expensive plans, including its commercial-free service and the increasingly popular Live TV plan, which includes a cloud DVR and access to local channels.
It also brings more eyeballs to Hulu with ads – a growing business for the streaming which now reaches 25+ million subscribers, including its live TV service, and sees $1.5 billion in ad revenue by the end of 2018. Meanwhile, it’s looking to grow its live TV side – according to a report this month from Bloomberg, Hulu’s Live TV service has now reached 2 million users and adds hundreds of thousands of new users per quarter. Hulu believes it can better attract more new users if it can promote its available upgrades to current subscribers — which is where this Spotify bundle also comes in.
Hulu says this discounted bundle is being offered to Spotify customers, new and existing, through June 10, 2019 or “while supplies last.” That implies there’s a cap on how many discounted bundles will be sold through this promotion.
It’s also worth noting the timing of the joint announcement is coming just days before Apple’s big March 25 “special event,” where it’s likely planning to unveil its own video streaming service for the first time. Some reports said Apple could be selling its service as a bundle with Apple Music; Spotify and Hulu’s preemptive move here seem to give more weight to those rumors. The two companies appear to be ready to challenge whatever Apple announces with an almost no-brainer alternative: Spotify with free Hulu instead.
In reality, this new bundle doesn’t mean Hulu is giving away its service for free — that’s just what it feels like for consumers. It’s actually a revenue-sharing agreement between Hulu and Spotify that benefits both parties’ user acquisition efforts. And both are choosing to take the hit on pricing as part of this agreement.