Hulu Is Adding US Subscribers At Twice The Rate Of Netflix

There's no denying that Netflix (NASDAQ:NFLX) is the 800-pound gorilla when it comes to streaming. The company recently reported record subscriber growth leading to 148 million customers worldwide, including more than 60 million in the U.S. Countless studies and surveys have identified Netflix as the country's leading streaming provider.

The company's impressive lead may not last for long, however. Streaming contender Hulu, controlled by Walt Disney (NYSE:DIS), announced at an investor presentation Wednesday that its growth continues to outpace the streaming leader in its most mature market.

Outpacing the leader

At the Hulu '19 presentation, the company highlighted its rapid subscriber growth, an expanded original slate of content, and a new binge-ad feature, all of which Hulu believes will "bolster its goal of becoming the No. 1 choice for TV, in and out of the home."

Hulu said its customer count surged past 28 million total subscribers, with the addition of 3.8 million new customers in the first quarter. That's more than twice the 1.74 million customers Netflix added in the U.S. during the same period.

The latest figures are a continuation of a trend that began in 2018, when Hulu added 8 million new subscribers for the year, a 48% year-over-year increase, bringing its total customer base to 25 million. That easily surpassed the 5.68 million subscribers Netflix added in the U.S. last year. It also "catapult[ed] Hulu's customer reach beyond that of the country's largest cable and satellite pay TV providers," according to the company's press release.

Expanding content lineup

Hulu also announced an expanded partnership with Marvel, which is fresh off the record-breaking success of Avengers: Endgame. The collaboration will yield two new live-action television series for Hulu.

Marvel's Ghost Rider tells the tale of Bobbie Reyes, "a quintessential antihero, consumed by hellfire and supernaturally bound to a demon." Marvel's Helstrom follows the exploits of Daimon and Ana Helstrom, "the son and daughter of a mysterious and powerful serial killer ... as they track down the terrorizing worst of humanity." Both are slated to debut in 2020.

Using the tried-and-true Marvel formula, Hulu recently announced it would create four animated shows based on Marvel fan favorite characters M.O.D.O.K., Hit-Monkey, Tigra & Dazzler, and Howard the Duck. The four programs will result in a superhero team-up finale, Marvel's The Offenders -- an animated take on the successful partnership between Netflix and Marvel that led to Daredevil, Jessica Jones, Luke Cage, and Iron Fist, and culminated in Marvel's The Defenders. Netflix and Disney have since severed their relationship, as Disney prepares to launch its Disney+ streaming service on Nov. 12.

Hulu's advertising is evolving

Hulu also said it will debut a binge-advertising experience, as part of its viewer-first approach. The new tactic will allow marketers to target viewers in a way that is "situationally relevant to their viewing behavior." The company will share more on this new ad format later this year.

This is the second such innovative advertising method developed by Hulu. In January, the company introduced pause ads, which appear several seconds after the viewer pauses the content they're watching. Rather than being shown a traditional commercial, users see a banner see-through ad on the right side of the screen, which disappears once viewing is resumed. This continues Hulu's investment in what it calls "non-intrusive ad formats."

Selling points

Hulu is marketing itself as a compelling alternative to Netflix. The company boasts an on-demand library of over 85,000 episodes, "home to more TV episodes than any U.S. streaming service," a clear shot at the streaming leader. Hulu also said it's "the only place where viewers can watch full seasons of nearly all (80%) of this past year's Emmy-nominated programming."

The company went downmarket earlier this year, lowering the price of its entry-level, ad-supported plan to $5.99 from $7.99. Not coincidentally, the move happened at about the same time Netflix raised its prices, increasing its cheapest plan from $7.99 to $8.99. Hulu also has an ad-free version of its service for $11.99, and offers Hulu + Live TV for $44.99 per month.

The company appears to be positioning itself as the anti-Netflix, a strategy that has thus far yielded impressive results.

This article originally appeared in the Motley Fool.

Danny Vena owns shares of Netflix and Walt Disney and has the following options: long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.