Hulu: Ho-Hum About Advertising Prospects
Hulu, aside from offering free, legal video content to the internet community, also has a powerful advertising model that promises to get your message across to highly engaged viewers, at least that is what the company asserts. Founded in 2007, Hulu is co-owned by NBC Universal, News Corp. and most recently, Disney. Despite the emergence of online multimedia platforms and Hulu’s leadership position in the market, there are a few signs indicating that the video titan might not being doing as well as one might assume.
The Big Issues
Hulu is attracting a large number of visitors, but continues to deal with many hardships in other areas. Its biggest roadblocks are advertisers, content providing partners and the parent companies concerned that the site might actually cannibalize its own competing media. Due to the rising pressures from content providers, Hulu has retracted the initial pledge that allowed anyone to syndicate its content anywhere on the World Wide Web. On top of this, there is a fast-growing list of competitors launching similar services online in attempts to bank off Hulu’s success and its main rival, Google’s YouTube.
Is Hulu Making Money?
Even though the site has seen a huge surge in traffic since its inception, Hulu has struggled to convert its popularity into profitability. In November 2008, Arash Amel of Screen Digest projected that Hulu would make an estimated $180 million in revenues this year. Well in a recent interview with BusinessWeek magazine, Amel lowered that figure considerably to around $120 million. He remarked, “What we’ve seen is rapid growth in consumption, but the advertising isn’t keeping up.” According to his analyzation of Hulu, the site only sold an estimated 60 percent of its advertising inventory, with most of the remaining space being allocated to public service announcements. Like many observers, Amel is blaming Hulu’s struggles on the economy. Amel’s statement co-signs the fact that while online advertising offers benefits TV simply can’t, those benefits are not as significant during the current economic crisis. These sentiments were echoed by Jason Blackwell, analyst at ABI research. Blackwell told BusinessWeek that “Right now advertisers are trying to cut back anywhere they can, so unproven models like Hulu are usually the first things to go.” Hardships aside, Hulu spokeswoman Christina Lee remains optimistic about the situation, stating, “I don’t think that anyone can say they are impervious to the macroeconomic environment, but we’re still hugely optimistic about our ability to monetize the service.”
Hulu’s Outlook
Although several industry analysts and observers have changed their opinions on Hulu, the folks behind the multimedia magic are nowhere near ready to throw in the towel. The site continues its mission to enhance the TV-viewing experience with the recent launch of Hulu Desktop, a free software application that allows users to watch video content using their PC or Mac remote control. This program has all the high-quality content and organized navigation aspects of the internet service, but doesn’t tie the viewer down to his or her keyboard or mouse. Last week, Hulu also made a move to strengthen its advertising model by using AudienceScience’s ad targeting platform on a site-side basis. Through this partnership, its sales team now offers behavioral advertising services as well as more typical forms of targeting to advertisers.
There is no denying that Hulu has been incredibly successful in a very short amount of time. Even though it will probably never attain the popularity of YouTube, it doesn’t have to as this site is an entirely different animal. Perhaps the big question is will Hulu survive during the harsh economic climate, or fail and simply serve as an example to its competition of what not to do?
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