This week Disney announced they are the latest to hop onboard the Hulu express with a 30% investment stake along with ABC content like ‘Lost’, ‘Desperate Housewives’, and ‘Grey’s Anatomy’. Disney will get three seats on the 12-member board, the same as News Corp and NBC Universal.
Disney’s arrival on the scene, after months of negotiations, means three of the four major US broadcasting networks are now directly involved with Hulu: NBC, Fox, and now ABC- only CBS is absent with their stand alone TV.com venture, but if rumors are any indication, it won’t be long before they join Hulu. Hulu Chief Executive Jason Kilar said about CBS, ”We’d love to have them be a part of Hulu … ultimately it’s their decision.”
So what does this mean for viewers?
If Time Warner’s broadband usage cap proposals are any indication, more and more people are choosing internet video as their medium of video delivery. It is convenient, increasingly available, improving in quality, and cheaper (free) than paying for cable or movies.
Disney’s involvement is obviously huge. They bring popular content and a promise to dedicate ~$25M in advertising to Hulu on its network. ABC’s media player sucks to be quite honest, anyone that had to deal with it will welcome the intuitive user friendly UI that Hulu offers.
But Disney’s foray into the foray also signals a shift in internet video quality and credibility. Google must be uneasy. They spent almost $2B for YouTube, and while the site will always have a purpose for cat vids and drunk girls, it hasn’t turned into the media powerhouse everyone thought it would. Hulu is more attractive for advertisers, has infinitely higher monetizable traffic, and can control its content’s advertisements. YouTube gives too much (I hate saying that) power to its users and while lining up some good content recently, it lacks in revenue per video and revenue per user. And as Hulu continues its rapid growth in the US, it will continue to cut into YouTube.
YouTube still rocks traffic comparisons
Think of how annoying it is to see those copyright content removed claims on YouTube…happens all the freakin time. Hulu viewing is like watching a movie or television. Video is clear, cleanly streamed, advertisements aren’t invasive (and almost welcomed), and content is neatly organized in an easily accessible manner. YouTube will always be there for ‘How-to videos’ or ‘Eating challenges”, and that is great for the internet, but it is horrible for business.
Consider this point: The more traffic that YouTube gets, the more it loses money. The more traffic that Hulu gets, the more it makes money.
It doesn’t take an MBA to figure out which is the more viable long-term solution. Google might be fine with YouTube as the tool it is. But if they are serious about delivering video content on the internet, they better react quickly.
So Hulu is no longer the ‘future’ of video delivery, it is the now. It is going to change things:
- how broadband internet charges its users (Usage caps are inevitable as sad as it is)
- how advertisers decide to tackle rapidly changing market demographics on the internet in a recession
- how content is monetized (South Park has offered their shows for free on their website for years)
- how are advertisers going to combat the rapid growth of ad-block in browsers?
Youtube is a massive maelstrom of user generated content. It has been an invaluable tool for the internet’s growth but the YouTube model is dying. Hulu is now the premier professionaly generated video content site. I am sure reveneues aren’t even close to YouTube yet but as traffic climbs, I guarantee those revenues make up a considerable gap in the next year with this Disney deal. CBS will have to join to remain viable so it will get even bigger then. If you haven’t used Hulu yet, try it out, I think you’ll really enjoy it.
