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Online video left the station a few years ago, riding YouTube to prominence but not to prosperity. Now, an article in the Economist details how Hulu has followed after its groundbreaking cousin, reaping the rewards of the genre YouTube proved could work.
Hulu seems to be hitting the proper chords, with a great interface, browsable catalog, some real crowd-pleasers, and strong corporate backing. I know a few people who don’t have a TV anymore, and Hulu is their television network.
. . . users have been flocking to it, watching 216m videos in December. Just as importantly, Hulu’s inventory for advertisers appears to be sold out. So Hulu is in the rare position of being able to increase inventory (through new content and more views) and make money from it. Hulu now has more than 100 advertisers, including big brands such as McDonald’s, Bank of America and Best Buy.
And according to the CEO of rival Joost, video has a different use-case, creating a passive audience open to advertising:
Films and TV differ from music, says Mike Volpi, Joost’s boss, in that people watching tend to sit still, whereas people listening tend to move; and people usually watch a show only once but listen to a song again and again.
The business model of YouTube is much more tenuous, and the demands to scale the underlying technology much greater. Hulu benefits from a cleaner business model and a manageable inventory of video. Yes, it grows, but not everyone and their dog is putting up a giggling baby or LOL kitten video.
To me, the lesson is that online business can work when the user’s needs are properly addressed. I think STM publishers can learn from this. Shoveling a journal online isn’t the same as making a good online journal. User interface design, use cases, and well-managed business integrations can make the entire thing work, making it not only painless for the user, but delightful.
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I think hulu is winning because they’re building up on a tried and tested business model — that of offering video advertising on TV shows and movie — and adding user benefitting services to it. It gives the user the freedom to watch TV anywhere and at anytime and any number of times along with the traditional familiarity of already pervasive TV technology. I think it’s an example of how incremental improvement proves to be better (at least more successful) than radically new ideas.
Posted by Vinod Khare | Feb 25, 2009, 4:02 pmIt’s bizarre that neither you or the Economist mentioned that it’s limited to US viewers currently.
Posted by Nick | Feb 25, 2009, 6:26 pmThe reason hulu works for customers is that it’s free. Why pay $12 a month to TiVO or another DVR service for the privilege of time shifting, when you can get it for free on Hulu? Why pay $50 a month to a cable or satellite company when you can get so much programming for free on the internet.
Yeah, you can fast forward through the commercials on Tivo, but you have to actually watch them on hulu. That works for me, and it obviously works for the advertisers as well.
Posted by Carol Meyer | Feb 26, 2009, 4:16 pmThe other thing about Hulu that I like is that the commercials are short – some of the commercials on NBC.com and other network sites get ridiculously long.
I think Vinod has a great point too – that is, it built on the knowledge gained from other attempts. Can anyone say Netscape?
Posted by Ann Michael | Mar 1, 2009, 1:34 pm