Hulu Building Profitable Business On Long Tail Television
Jul 1st, 2008 | By James Lewin | Category: Featured Story, Internet TV, Streaming Video, Video 
Silicon Alley Advisor’s Michael Learmonth has an interesting analysis today about Hulu – calling it a consumer success, but still a small business:
We estimate Hulu will sell between $45 million and $90 million of advertising during its first 12 months — April 2008 through March 2009. By the time it pays off its content partners, it will book between $12.5 million and $25 million in net revenue.
On the low end, we estimate that Hulu.com will generate close to the revenue generated by, say NBC.com, which is said to generate “tens of millions” in revenue this year. On the high end, Hulu would net $90 million in gross ad sales — in the same league as some estimates for YouTube.
Hulu is a sexy Internet video service, but a thin-margin, tough business.
It’s a good analysis – but Learmonth misses a key difference between Hulu and YouTube:
Hulu has built a library of long tail content with advertisers lined up to sponsor it; YouTube has built up a library of long tail user-generated content that’s very difficult or, in some cases, impossible to get sponsors for.
This difference highlights one of the key challenges of making money with podcasting, vlogging and other user-generated media: advertisers are much more comfortable working with known content from established sources.
Hulu isn’t perfect, but it’s done a lot right. Hulu’s biggest challenge is lack of distribution: it needs to get on Apple TV and other Internet TV devices to really take off.
Advertisers just want to advertise.
They don’t care about the show, just that its got some eye balls watching it.
Podcasting’s biggest problems is the same as “YouTube”s; its perceived as amateur hour.
But when you invest your time and money into a property, or a podcast, it shows.
When you can demonstrate 320+ episodes with plans for more, it shows.
Advertisers want to know that they’re not going to totally throw their money into a roaring furnace,
With podcast advertising, its possible to charge them ‘by the hit’ on their specific material and eliminate the furnace entirely.
Well tv websites like Hulu, ZoogaTV and TidalTV have gotten it right, professional video content is the way to go. great movies, tv shows and comedy in one single destination is this biggest plus and advertisers will support it.