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Why Hulu's Business Model May Have a Leg Up on YouTube and TV
Posted Apr 28, 2009 02:00pm EDT by Sarah Lacy in Internet, Media, Newsmakers, Venture Capital, M and A, IPOs, RecessionUnlike the prevailing Web 2.0 practice of
build-a-product-users-love-first-and-monetize-later, Hulu CEO Jason Kilar has
always said the users are just one of the three “customers” Hulu serves. The other two are the networks that give Hulu its premium content and
advertisers. Yes, paying advertisers!
Kilar says ads on Hulu boast double the brand and message recall to TV.
He says it works so well that the site is able to charge a higher CPM—or cost
per thousand users—ad rate than its partner television networks.
Like
most private company CEOs, Kilar was mum on further details, but analysts say
Hulu earned $65 million in revenues last year and expect it to top $100 million in
2009, easily. It was enough to have the Financial Times declaring that Hulu
could catch YouTube in revenues in 2009—even with a substantial gap in traffic.
Not so fast, an industry analyst told BusinessWeek in 2009, predicting Hulu’s revenues would be hit by the recession. Kilar counters that the company is tracking ahead of plan. Also in this segment, Kilar responds to user concerns that such success will only breed more ads interrupting their clips.
15 Comments
- Tuesday April 28, 2009 02:51PM EDT
Hulu's great. I just plug the laptop into the TV and watch at 480p. Crazy thing is that I would rather watch a couple episodes of the same program with significantly less ad time at worse picture quality than to watch the same program at the programming slot with higher picture quality (HD). Hope that Kilar keeps to the model of less, but more effective advertisements.
- Tuesday April 28, 2009 03:11PM EDT
"Crazy thing is that I would rather watch a couple episodes of the same program with significantly less ad time at worse picture quality than to watch the same program at the programming slot with higher picture quality (HD)."---sandy Bingo. Ever since I first hooked my home cpu to my TV, I've been watching everything over it. My dvds play great, it can work as a slide show of art, cool gaming screen, I can stream pretty much any TV content over the net, etc. Having a highspeed connection and internet knowhow made cable or the dish obsolete in my house. It's all at a very good price too.
- Tuesday April 28, 2009 03:17PM EDT
It si not only You tube and Hulu. All Television network are starting to provide their content online. Take a look for example http://www.bbpctv.com to see all TV providers online.
- Tuesday April 28, 2009 03:24PM EDT
I tried HULU and was not impressed by the resolution. The resolution of Neflix online is much better, if you have the broadband connection to handle it. And, no commercials on Netflix online. Frankly, though I understand they need commercials, I don't need to watch them and thus prefer to watch DVD's or recoreded shows to skip commercials. Sure, it costs more but my time is worth it. All in all though, I do see HULU as a viable competitor for the traditional video broadcasters like cable and satellite where you pay for access and STILL GET COMMERCIALS!
- Tuesday April 28, 2009 03:47PM EDT
Hulu has a chance to really break new ground by following the European model of advertising: cluster the ads at the beginning and ends of a program -- don't interrupt it! European ads work more successfully than their American counterparts because the viewer is primed to watch for the ads (which are unanimously more clever than their American counterparts) and note the brand identities. If Hulu continues to mimic American TV, I will turn to other online video media once the novelty wears off and so will millions of others. Fewer, more effective ads is the answer -- but also, ads placed where they belong, not destroying the creative video experience.
- Wednesday April 29, 2009 10:49AM EDT
I love Hulu. I'm on the road most of the time, so for me Hulu affords me the chance to catch up on prime time episodes that I love. Even on the road wherever I'm staying I make sure I have access to broadband internet. My Home Theater and TVs are seeing less use since I'm at the desktop watching Hulu. I think Hulu will become the next major 'network'. Next I'll have to upgrade everything to connect to a LAN (the HTPC, The HT processor, and all TVs). And I can't wait for AT&T to get fiberoptics to me (U-verse) with it's 10Mbps speeds.
- Wednesday April 29, 2009 12:51PM EDT
Hulu is great, but take a look at OVGuide.com for literally 1000's of competitors to their business model. They will have a tough time keeping market share in this very competitive market.
- Wednesday April 29, 2009 12:52PM EDT
Hulu is great, but take a look at OVGuide.com for literally 1000's of competitors to their business model. They will have a tough time keeping market share in this very competitive market.
- Wednesday April 29, 2009 03:21PM EDT
They misspelled the name HULU is should be LULU. That fits better.
- Wednesday April 29, 2009 03:37PM EDT
I hate advertising in all of its annoying forms and media. Where advertising is, I'm not, where advertising goes, I go the opposite way. Always.
Yahoo! Finance User - Wednesday April 29, 2009 03:49PM EDT
Joel, without Ads, you wouldn't be getting any of the great programs. I agree with you that they eat up valuable time, but Hulu's model seems effective since you don't often see the same ad over and over again during the same break as some channels have began doing. Once they move it to handhelds, hulu will be on fire!
- Thursday April 30, 2009 04:27PM EDT
Today Disney annouced infusion of investment capital. Now Hulu is Fox, NBC, and ABC. Wow I'm liking it better everyday. I consider Youtube.com run by a bunch of pirates...
Yahoo! Finance User - Sunday May 03, 2009 02:24AM EDT
any chance of this company going public and being on the stock market?
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- Tuesday April 28, 2009 02:26PM EDT
hulu will probably catch like wildfire, but not until they open up API's etc to products like mythtv, sagetv, tivo, etc... or at least merge with one of those.