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Hulu is making its competitors sweat

These days, Hulu is asking its competitors tough questions.  For example, "Would you pay to watch TV episodes, when you can see them for free at your convenience?"

The site's basic premise is exactly that -- to provide legal streaming television at no charge -- and it is turning heads as it is perhaps the first profitable attempt at providing free (and legal) media in the online world.  The site has taken a page from web news' playbook, discovering the power of using ad revenue to pay for content.  It offers content from co-founders NBC and Fox, as well as from Comedy Central, PBS, USA Network, Bravo, Fuel TV, FX, SPEED Channel, Sci Fi, Style, Sundance, E!, G4, Versus, and Oxygen.

Now another major company has joined the fold -- Disney, owner of ABC, has agreed to start streaming content on Hulu, along with acquiring nearly a 30 percent stake, reportedly, in the company. 

The move puts pressure on a lot of people.  First of all, it puts television network CBS in a tough spot, as the only provider not to be on Hulu.  CBS's is not struggling for lack of effort, but its site failed to crack the list of the top ten video providers in March 2009, according to market research gurus Comscore.

Secondly, it puts a lot of pressure on Google and YouTube.  Google's video properties include YouTube which tops Comscore's list with close to 6 million unique visitors per month.  While much of YouTube's appeal is also home video-esque content, it draws many hits from commercial media as well.  With the Disney deal, Hulu is likely to be propelled into second place in the list of online video providers, albeit a distant second (Disney and Hulu combined had about 500,000 unique viewers).  So while Hulu still trails far behind Google's massive video empire, its turning up the heat on the giant.

And comparatively, CBS and Google have it easy versus competitors Apple and Amazon.  The rise of Hulu and its growing success are proving a massive headache for both companies, particularly Apple which was hoping to grow its iTunes business with TV rentals.  Both Amazon and Apple are struggling to convince users to buy content, when they can view it for free legally on Hulu.

Granted, Apple and Amazon do have some unique advantages.  Hulu is not available for airplane trips (yet!) or long car rides (barring wireless aircards).  However, other advantages are much less.  Unlike YouTube, Hulu streams many of its TV shows in 480p and high definition.  HD has traditionally been a trump card for Apple and Amazon's TV offerings.  Apple can take a bit of comfort -- at least Hulu is reportedly coming to its iPhone -- so its loss from its iTunes business unit may be a gain to its iPod/iPhone unit.

In summary, Hulu is one of those startups like Google or YouTube that seems destined to become a giant.  While it’s still young, its already proving a headache for veteran competitors like Apple.  However, for fans it provides pure joy, as one of the web's best new sources of video.

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RE: The problem with Hulu from a users perspective
By arkcom on 5/3/2009 8:50:29 PM , Rating: 2
I think it's mostly an issue of storage space. As Hulu grows and adds more content they will probably start to keep more old episodes.

By imperator3733 on 5/4/2009 7:51:08 PM , Rating: 2
Storage is cheap (about $100/1TB) these days so I don't think storage space is an issue (although I don't know how big the video files are).

One thing I had been thinking of is for Hulu to have a paid ($5-10/month) option where episodes never expire (you would still be able to access the last 5 episodes/2 weeks of a show for free, however). That would help the networks get a bit more money from the shows. The main reason networks don't pay attention to online viewing when deciding which shows to cancel is because there isn't that much money in online viewing. This would help with that problem, which would be a good thing.

RE: The problem with Hulu from a users perspective
By DM0407 on 5/4/2009 10:53:42 PM , Rating: 2
Maybe you should make a Hulu equivalent with a pay service. Hulu is making money as is, why fix what isn't broke.

By imperator3733 on 5/5/2009 12:54:51 AM , Rating: 2
I know they're making money, its just not enough for the networks to pay attention to the online numbers when deciding which shows to keep. If they make more money online, they'll be more likely to pay attention to those numbers. I have a feeling that a higher proportion of people watch the good (i.e. smart/intelligent) shows online as opposed to the bad shows. This is leading to the good shows being canceled while that bad shows survive.

"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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