Hulu considering ad-free tier to better compete with Netflix, other video services

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Streaming video service Hulu is reportedly exploring the possibility of a completely ad-free tier that could launch as soon as this fall, and cost about $12 to $14 a month.

The project is operating under the codename "NOAH," short for "No Ads Hulu," sources told The Wall Street Journal. The service's owners are still said to support the idea of having an ad-supported version, and are allegedly working to make ads more relevant to subscribers. Hulu is a joint venture by Fox, Disney, and Comcast.

Subscribers currently have access to two tiers. The first offers a basic amount of movies and TV shows for free, but unlimited access — and any viewing on a TV, phone, or tablet — costs $8 per month. Both levels have advertising, even though Hulu's main competition, Netflix, has a similar monthly fee and no ads.

Hulu's subscriber base is now 9 million, up 3 million from 2014. The service has been dwarfed by Netflix however, which has over 65 million subscribers worldwide. Hulu is only available in the U.S. and some distant American military bases.

TV industry executives are allegedly worried about the impact of ad-free services because they're not only attracting viewers and hurting ratings, but training people to expect TV shows without ads. This has drawn channel owners to Hulu, and the Journal suggests that the high price of the proposed NOAH tier is a way of keeping ad traffic going.

Nevertheless, an ad-free version of Hulu could present a challenge not just to Netflix but the sudden influx of Internet-only live TV services, such as HBO Now, Sling TV, PlayStation Vue, and Apple's upcoming service, which could also debut this fall. While Hulu doesn't offer live content, its emphasis on ongoing TV shows — including many not on Netflix — could help make it a viable alternative.