Hulu is on track to match the advertising earnings of YouTube by sometime next year, barely 12 months after its launch.  It has partnerships with many major networks to stream their premium shows online, has the kind of inventory that large brands are looking for.  YouTube has a channel devoted to CBS content and now streams video from MGM’s back catalogue, but they need to make progress in that area to competively push for those coveted brand dollars.
 
Although YouTube has huge traffic and name crecongnition, Hulu, which focuses soley on Hollywood producted content, may end up as the better business model.  "I don't know who's going to come out ahead," said Elizabeth Curtis, associate analyst for consumer markets at IDC, a technology industry research firm.  In the ad-supported video market, she adds, "it will be between them to duke it out."

Right now, YouTube dominates the online video world.  The Google-owned site is the destination of choice for just about anyone who wants to post a video online.  YouTube hosts about 6 billion video streams in the U.S. alone.  That is about 16 times the number of videos watched on Hulu.  But, YouTube, which had 83 million unique hits in September, is only expected to generate $100 million for the year, and Hulu has much higher hopes.  This is because advertisers do not value much the home-made content that consists mainly of cute cat videos, dudes crashing on skateboards, and street rapper beats.  The bottom line is that analysts are wondering when, if ever, will Google turn YouTube into a monetary success.  YouTube may be wildly popular, but Google’s ability to realize a profit has been difficult.  

Hulu may not size up well against YouTube,  in May 2008, Hulu served only about 88 million videos compared to YouTube’s 4.2 billion videos, but it has the luxury of monetizing the vast majority of its videos instead of the 3% or so that YouTube can sell ads on.  That pretty much levels the playing field in terms of revenue and profit potential.  If YouTube has demonstrated us anything, it is that there is a huge market for user-generated content out there, but from a business standpoint, professional content is the place where advertisers go to when they want to spend their money.  Athough Hulu will probably never grow to the size of YouTube, Hulu’s own advantage is its ability to draw advertisers to the content that more effectively attracts their target audience.

Content Is King

Hulu, based in Los Angeles, is in talks with Walt Disney Co.’s ABC to add television shows, and with the four biggest record labels for music videos, people familiar with the discussions have told Bloomberg.  YouTube has been inhibited by the quality of its user generated content, which is the largest segment of the it's offerings, does not attract the kind of large scale campaigns brand advertisers like.

About The Author:

This article was written by J. Mark Soveign who writes for Wertheim Communications LLC as well as Mooker.Com

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