Hulu Revenue v. Youtube Traffic

Hulu has been a hot topic in media news for over a year now, and it has been traded with increasing frequency over the last few months. It’s hard to believe that it’s only become the third largest online video source in recent months. Hulu is one of those websites that seems like it’s always been around to provide content. In March, Hulu’s tally of 380 million online streamed videos beat out Yahoo, who hosts only a paltry 350 million. According to ComScore, Hulu’s next rival is Fox’s interactive media, which boasts over 437 million videos. It’s not going to catch up to Youtube any time soon, however. The household name in online videos streamed 5.9 BILLION videos in March alone. This truly puts the online video sharing sites into perspective.

Youtube’s user generated content may be great for sharing viral videos, but it’s size doesn’t really stack up when it comes to ad revenue. Hulu, despite being only a fraction of the size of Youtube, is expected to bring in over half of the ad dollars that Youtube expects. That’s 120 million for Hulu, and only 200 million for Youtube, which is highly disproportionate.

The correlation between desirable content and ad revenue generated is the reason that Disney has discreetly bought up 30% of Hulu for a sum that has not been publicly named. Disney currently operates through its ABC portal, but an alliance with Hulu will give the company a far broader audience base. Hulu also benefits quite a bit in this arrangement, as it will now have free access to popular primetime shows like “Lost” and “Desperate Housewives.” Disney shares the board with NBC and Universal, and holds three seats.

This model of video aggregation is proving to be even more valid, considering that this is the first big Media buy in recent memory. Questions remain, however, as to whether Hulu can continue to expand at the current rate from a user standpoint.

Hulu’s recent success may be due to a series of popular commercials starring celebrities such as Alec Baldwin, in which Hulu execs are supposedly aliens. These moderately amusing commercials have heightened awareness of the site, and Disney’s new marketing dollars can only help increase brand awareness.

With Hulu arising as a legitimate market share of TV audiences, it is interesting to see how competing news and TV agencies will keep up. As broadcasting agencies fight to remain relevant in the internet boom, how they develop their online presence and partnerships will be critical.

Some sites are resisting the pull of Hulu. For example, CBS, which uses its own portal TV.com. Apple is also resisting free online videos, in favor of paid rather than ad based models. Youtube has shown that its content does not guarantee ad dollars, so it will also be interesting to see how it copes with a lack of access to prime-time shows.