Hulu Finally Starts To Menace YouTube

Hulu, the premium video site owned by NBC Universal, News Corp., The Walt Disney Company, and Providence Equity Partners, began to make impressive strides as it passed the number of videos viewed at Microsoft, Fox, and Yahoo! sites to move into second place behind Google’s YouTube during the month of February. The critical difference between YouTube and Hulu is that much of the content at the Google site is posted in low resolutions by amateurs. Hulu’s content is strictly full-length movies and first run TV shows. According to the company, it brings together a large selection of videos from over 200 leading content companies.

Hulu was well behind several portals in videos viewed just a year ago. In February, according to comScore, viewers saw more than 912 million videos on Hulu. YouTube remained in first place with 11.9 billion.

Perhaps the most important advancement for Hulu is that an average visitor to the site in February watched 2.4 hours of  video. Hulu also ranked second among all major video sites based on “average videos per viewer” at 22.3, still well behind YouTube’s 93.9 views.

The number of hours per month that Hulu visitors watch and its advance ahead of “mainstream” video sites owned by portals and large entertainment sites is something of a “coming of age”.  The complaints about YouTube from major media companies is that they do not want their ads next to mediocre content. That has undermined Google’s ability to sell the site to major marketing firms. Hulu, however, runs video commercials from a number of large advertisers.

According to Credit Suisse, YouTube loses as much as $740 million a year. IT firm RampRate puts the number at less than half of that. While Google does not disclose the figure, it has struggled with getting more high-quality content on the site that might compete with Hulu. The most viewed videos on YouTube are still very short clips posted by members of the site.

According to several news reports about the company’s plans and comments from some of its owners, Hulu may start to charge for its content. The website may end up being the entertainment industry’s online premium content Holy Grail, a place that collect a large user audience for premium content that can be supported by both advertising and subscriber fees. It has finally grown big enough to matter.

Douglas A. McIntyre