When video destination Hulu was announced many people dismissed it. But that’s no longer the case given how nicely the site has developed and how much content it now offers. For example, when I was obsessively watching SNL political parody videos I was pretty much exclusively on Hulu.
The traffic leader is far and away YouTube. But that hasn’t brought the flood of brand advertising dollars that Google was hoping for when it acquired the site. Google has tried a number of ad units and strategies and diversified its revenue strategy on the site, most recently introducing what is probably its best chance to monetize the site in the form of Sponsored Videos (a version of Google AdWords).
But these efforts haven’t yet paid off in a significant revenue stream. Along those lines, I was fascinated by a story in the Financial Times citing a financial analyst prediction that next year YouTube and its much MUCH smaller competitor Hulu will make about the same in ad revenue:
Neither company breaks out its advertising revenues but Arash Amel, analyst at Screen Digest, forecasts that in 2008 YouTube will generate about $100m in the US, compared with about $70m at Hulu. Next year both sites will generate about $180m in the US, he says. YouTube currently earns around half of its revenues in the US, while Hulu has not yet launched internationally.
What this amazing projection reflects is that brand advertisers are still very squeamish about user-generated content. We’ve heard this from the beginning and it continues to appear to be true.
Screenwerk 
November 18, 2008 at 8:30 pm
With so many Web 2.0 companies who were founded without solid models for generating revenue, Hulu is a refreshing example of a company that is getting it right. They found a way to provide quality content, package it beautifully, and support it with an ad model that works for big brands. As a user, I understand that in exchange for viewing ads from a single company, I get the chance to watch some of my favorite content in a high quality stream. I can watch what I want, when I want, and I don’t get the devalued litany of multiple ads that result in me completely tuning out. Hulu will be a prime example of the coming of age of Web 2.0, where social connectivity finally meets the revenue model.
March 12, 2009 at 6:54 pm
[…] Hulu has also done a better job of monetization than YouTube. […]