The number of videos view online by America internet users has increased steadily over the last three years, primarily due to the success of Google’s (GOOG) YouTube which the search company bought in late 2006 for $1.65 billion. YouTube has lost money since then, according to many Wall St. analysts. The site is still primarily populated by video content that is “filmed” and posted by amateurs. Almost all of these contributions are short and shot in low resolution.
YouTube has tried to get premium video on its site by setting up partnerships with major content companies like CBS (CBS) and Time Warner (TWX), but its success has been limited. YouTube as also had problems getting marketers to run ads on the site. Many of them do not want their expensive TV commercials next to short amateur clips.
The cause of premium content on the web advanced in December as Hulu, a site owned by Disney (DIS), News Corp (NWS), and NBCU, finished second behind YouTube in “videos viewed” according to comScore. Hulu served more than 1 billion videos, which put it well behind Google sites which served 13 billion streams but ahead of portals Yahoo! (YHOO), Microsoft’s (MSFT) MSN, and AOL (AOL).
Hulu has been an experiment for major media companies and it is starting to become a successful one. Almost all the content on Hulu is premium TV shows or feature-length films. Hulu’s does not charge anything to viewers but does run advertising in most content. The next stage of Hulu’s development will be to set up a system which will force consumers to pay to watch some of its programming. It is a matter of conjecture as to whether that will be a financial success. But, at least Hulu has the critical mass of viewers to make the opportunity to charge viewers a possibility at all.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks