Blog Post

How Hulu is Like Obama

The blogs are abuzz this morning with a new prediction from Screen Digest analyst Arash Amel, who says that Hulu will generate as much revenue as YouTube next year. What’s surprising about this statement is that it isn’t surprising at all. In fact, in the current race between the two online video rivals, the upstart Hulu is starting to feel like President-elect Barack Obama, while YouTube is looking more like McCain.

Amel told the Financial Times yesterday that he believes YouTube will generate roughly $100 million in revenue in the U.S. this year, compared with $70 million at Hulu. Next year the two companies will be on par, with Amel projecting each generating $180 million in the United States. Amel isn’t the first make such a prediction. Mark Cuban boldly made a similar statement (without specific numbers) back in June. [digg=]

Because Hulu only deals with premium content, it’s always been theoretically able to monetize all of its offerings. Earlier this year, it was reported that YouTube, which only shows ads on partners’ videos, could therefore monetize just 4 percent of its content (it has since added ads on search pages). Though it has more volume, it’s shifted into high gear, adding more advertiser-friendly premium content providers like MGM, Lionsgate and CBS to its roster.

Additionally, YouTube has added to its advertisement options. Last week, the company announced the availability of ads in embedded videos (at our NewTeeVee Live conference) and officially unveiled its sponsored videos program.

But YouTube’s actions as of late feel sort of like John McCain’s campaign in the waning days of the election. The company is under the gun to make money and, knowing it’s behind the eight ball, is throwing everything and anything it can at the problem. Heck, the company even flip-flopped on pre-roll ads.

To keep the campaign metaphor going, Hulu feels like the “No drama Obama,” especially after hearing CEO Jason Kilar speak at NewTeeVee Live last week. He was cool and collected as he talked about the vast $80 billion ad revenue pool Hulu can draw from (for all of its content). Kilar also spoke about his company’s obsessive attention to detail, especially when it comes to advertising and engaging the viewers to make ads less icky. It’s integrated a thumbs up/down voting system for viewers to rate ads as well as giving users more choice with ad options. Users can not only choose from different ads to watch during their programming, but also are sometimes given the option of watching a pre-roll or a mid-roll.

YouTube still trumps Hulu (and everyone else) in terms of traffic, so you can’t count it out. And Hulu is completely reliant on its partners for its content; FOX or NBC could theoretically pick up their marbles and go home. But with Hulu growing quickly — the service hasn’t even been open to the public for a year, and it says it currently receives 12 million visitors and serves up 145 million streams per month — that seems unlikely at this point.

11 Responses to “How Hulu is Like Obama”

  1. William Maggos

    Hulu is just a gateway to get the same networks and producers of oldteevee on to the internet. The biggest problem for truly new media is just to get noticed, because they dont have all the advantages that come with network or cable or satellite tv. So its not the least bit impressive that the big media companies have found a way to leverage their dominance of television to dominate video on the net as well. Big media is learning that even if they make less money when folks watch their content online, at least they aren’t developing a taste for independent content and helping to grow a new competitor.

    The promise of newteevee (net video) is a completely open space for culture, at least that huge part of it which comes to us in video format. Anybody can make a video, a “tv show” via podcast, or stream live. This is an opportunity for independent media with unlimited distribution and no network rules to adhere to or corporate masters to keep happy. You no longer have to get on TV or get a movie deal, but you also shouldn’t have to go through iTunes or YouTube either. Its really as easy as registering a domain, installing WordPress, and uploading your video. Yes, the need for advertisers still sucks, but there are some alternative business models being developed to work around this level of outside control as well.

    Who is out there interested in building an open ecosystem for independent video? The folks working on Miro at the PCF are the best example, but who will build the settop boxes? Who will organize this community of independent creators to get all the pieces necessary working together?

  2. It makes sense that Hulu will make more ad revenue because presumably it can dig out more quality content from past years (and decades.) Not sure the political analogy holds however, since it’s not really a competition. If both sites continue to increase their revenue then they are both successful, right?

  3. Chris, Ive never been so insulted in all my life. ;) But seriously, I think hulu has nothing to loose – it wont water down their content or destroy their mission to allow users to stream other content they want through hulu. If hulu doesn’t add this, they will for sure lose – people dont want to install 5 different systems to play their content. This is why itunes and TiVo have a back-door that allows anyone to use the technology, even if they are not accepted into the elite directory.

  4. Andrew makes several good points, central of which is that, YouTube’s heart and soul is user generated content. It and Hulu two very different animals. Hulu depends upon passive viewers, YouTube depends upon active users. Hulu is mostly one way, YouTube is mostly two way.

    That being said, NBC Universal had no choice but to create Hulu, they needed the eyeballs. Now, do they have the brass ones needed to step fully into the user generated space and be the first of the big three to emulate, to the extent their legal departments allow, Current.TV?

  5. Ive been outspoken lately about Hulu and funny enough had been preparing a blog post that likened Hulu to George Bush, not Obama. I think Hulu is great and Im glad that they have created a spark by aggregating some of the best content available. But it would not hurt them to open up for the people. Hulu is a lot like George Bush right now. They have the conservative, couch potatoes happy to not need to think or worry about anyone else but themselves. But one day, hopefully Hulu will open up and become more democratic, like an Obama administration is expected to be. One that is more open and for the people, not just the elite.