Hulu and Netflix are embroiled in a price war. About 10 days ago, Netflix announced it would raise subscription rates for all three of its streaming plans by $2 a month for more than 58 million U.S. subscribers. Netflix will use the money to invest in more streaming content and to improve its profit margins. In response, Hulu announced it is lowering the subscription price on its basic, ad-supported plan from $7.99 to $5.99 per month, starting February 26. The price for Hulu’s $11.99 no commercials plan will remain the same, reports The Verge.

This new price drop could attract new subscribers to Hulu, making the streaming service more attractive to advertisers who could potentially reach a larger audience. Coming at the same time as the Netflix price increases across all plans, Hulu is taking advantage of possible subscriber churn.

Hulu’s announcement comes just weeks after the company reported its subscriber totals for 2018. Last year, Hulu added 8 million subscribers, bringing total number of subscribers to its live and streaming video on demand service to 25 million. This represents a 48 percent subscriber increase.

“Consumers have spoken loudly about their desire for more choice and control in their TV experience. They are seeing the enormous benefits of streaming, they’re deciding which content and brands are most important to them, and they’re choosing Hulu,” said Hulu CEO Randy Freer in a January 8 news release.

“In 2018, Hulu led the industry in attracting and engaging subscribers, building a powerful technology stack and cultivating a brand that both consumers and advertisers love. Looking ahead, Hulu is in the best position to be the #1 choice for TV – live and on-demand, with and without commercials, both in and out of the home,” added Freer.

In terms of subscriber numbers, Hulu’s claim to be the industry leader in attracting subscribers could be challenged by Netflix, who added 28.62 million global subscribers last year.

Regardless, the streaming wars are on. In its January 8 news release, Hulu said it has more TV episodes than any other streaming service in the U.S. with more than 85,000 episodes in its on-demand library. Hulu shared some other interesting statistics to highlight their value to subscribers:

• The company received 27 Emmy nominations in 2018 for the company’s Hulu Originals.
• Viewers who subscribed to both Hulu and Hulu’s Live TV streaming service spend 50 percent of their time watching on-demand or recorded programs.
• In the last 12 months, Hulu improvements include reducing buffering by 90 percent, introducing live game start notifications, expanding local affiliate support to more than 970 local live stations and adding an enhanced channel guide.
• Hulu added STARZ as a fourth premium content add-on to complement HBO, Cinemax and Showtime.
• The average time spent per subscriber on Hulu increased 20 percent.
• The median age of Hulu viewer is 32.

The Verge reports that Hulu is planning a price increase in one area – its Live TV service, which will increase $5 a month from $39.99 to $44.99. The justification for the price hike is that Hulu has expanded its channel line-up. Hulu is, however, also planning to reduce fees for live TV’s add-ons including enhanced DVR and multiscreen packages which will drop $5 from $14.99 to $9.99, says The Verge.

The big question is how and whom will subscribers choose. Will Netflix lose subscribers because of the price increases? Will Hulu gain any of Netflix’s subscribers with its base plan? Time will tell, but we think each service has its own advantages and disadvantages, so the prices may not have much impact.

Netflix offers original programming that viewers have grown to love and look forward to: Orange is the New Black, House of Cards, Narcos, Grace and Frankie, The Crown, Series of Unfortunate Events, comedy specials and much more. Netflix programming does not have any commercials. Amazon Prime has pre-roll ads now for its own shows, and Hulu offers a limited commercials plan, but Netflix is the only one of the three with zero commercials.

Hulu, on the other hand, has plan and pricing options, its own popular original content, and Live TV. For cord cutters, the live TV service is great for sports, news and network shows they can’t get without a cable subscription. Owned by Disney, Comcast and AT&T, Hulu has deep pockets and licensing advantages that Netflix doesn’t have.

Insider Take:

Personally, I don’t see any big swings in favor of either Netflix or Hulu. People have their favorite shows and different needs. Each service has its own advantages and disadvantages, and to the extent that both remain affordable, I don’t think incremental price increases or discounts will make a big difference to either player. I subscribe to both and neither pricing change will impact me significantly enough to make different choices.