Psst, Netflix Inc.: Hulu is Right Behind You

By Markets Fool.com

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The battle for Seinfeld streaming rights is over, and Netflix lost. It probably wasn't as theatrical an exit to the bidding contest as Kramer's "I'm out" scenein the classic episode in which he, Jerry, George, and Elaine compete to abstain from self-pleasure the longest, but the only thing that matters now is that Hulu has walked away with exclusive streaming video on demand rights to the iconic sitcom.

It's a deep catalog with 180 episodes. It also naturally didn't come cheap. Variety reportedthat Sony negotiated a rate of just under $1 million per episode -- or nearly $180 million for the entire series.

Netflix knows that it will never have access to all of the most popular classic or current shows. It might have the most leverage in negotiations -- armed with nearly 60 million paying subscribers worldwide -- but it won't come out on top every time a magnetic property hits the market.

No soup for you
Hulu has done a good job of setting itself apart. Unlike Netflix, it offers current seasons of many shows. It's also available for free as an ad-supported model for content delivered on PCs. Then there's Hulu Plus, the $7.99 a month offering that includes ads but allows access to premium programming on Web-tethered TVs, smartphones, video game consoles, and set-top boxes.

Netflix has been able to grow despite the differences, but Hulu is gaining traction on the premium end. It revealed on Wednesday morning -- at the Hulu Upfront Presentation where it made the Seinfeld deal official -- that it now has 9 million subscribers, 50% ahead of where it was a year earlier.

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This is a far cry from Netflix's base, but it's also worth pointing out that Hulu isn't licensed internationally. Hulu's 9 million subs are more comparable to Netflix's 41.4 million domestic streaming accounts. That still finds Hulu a mere speck in Netflix's rearview mirror, but it does have momentum on its side. Netflix has increased its stateside streaming audience by just 16% over the past year.

The numbers still agree with Netflix. It has grown by 5.7 million U.S. streaming accounts over the past year. That's nearly double the 3 million net additions at Hulu in that time. This isn't a contest. Netflix and Hulu can both win. They're both winning now. The real losers are the cable and satellite television providers that will continue to lose subscribers as folks replace those costly plans with one or more streaming platforms.

Hulu scored a big win in Seinfeld, but it's ultimately a victory for streaming television as it gives viewers one more reason to cut the cord. That's where Kramer's "I'm out" will echo the loudest.

The article Psst, Netflix Inc.: Hulu is Right Behind You originally appeared on Fool.com.

Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.