Last Wednesday saw the official launch of Hulu.com, a brand new video web site created by an odd partnership of NBC and Rupert Murdoch’s News Corp. Hulu has been available in only a few markets for testing purposes since last October, but the new heavyweight streaming video site has already garnered 5 million members.
Of course, that’s far from the YouTube’s 80 million worldwide users, but many pundits are predicting that Hulu will quickly close the gap to become a major player in the online streaming video market. ABC news.com is reporting that Hulu is focusing more on professional video productions, and leaving YouTube to dominate the amateur and homemade video niche.
To put it in baseball terms, Hulu is attempting to be the big leagues, leaving YouTube to the vet out talent in the minors. Hulu is definitely filling a gap in the marketplace by providing professional quality films, shorts, documentaries and sitcoms, as well as made for Web productions of a very high standard. Ideally, both Hulu and YouTube will find a place in the market, and the two will have a type of symbiotic relationship.
Although both sites feature streaming video, Hulu has a completely different business model than YouTube. To begin with, Hulu is not a free site like YouTube. The site is monetized in the time honored tradition of broadcast television, by airing commercial advertisements between breaks in shows.
While this may sound like a continuation of the over-advertised nature of broadcast television, and something that is sure to put off Web surfers, in reality Hulu uses shorter commercial breaks and high quality ads that are often quite entertaining in their own right.
Hulu is attempting to find an appropriate balance between monetizing the site with commercial advertisements, and keeping the “free-for-all” noncommercial vibe of sites like YouTube.
It is interesting to note that two of the biggest “old media” players are backing Hulu: NBC and News Corp. By and large, traditional media outlets have been slow to adapt to the realities of the new online world, and even slower to integrate their traditional programming online. NBC and News Corp. are taking a big chance here, but it was a chance that had to be taken by “old media” sooner or later.
With more and more young people turning away from television in favor of online gaming, streaming video and social networking sites like YouTube or MySpace, network television (and even cable) find themselves looking at an increasingly aging and sedentary demographic — not exactly an advertiser’s dream.
On the other hand, the coveted 18 to 39 demographic is spending more and more time online, providing advertisers with a young and trendy audience to market to — in other words, exactly the kind of consumers advertisers want.
Will Hulu wind up being the YouTube killer? For now, that looks doubtful, but they will most certainly find their place in the market; and assuming they can get the balance right between free Web content and tasteful advertisements, Hulu looks destined to be a big success.
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