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Video portal Hulu has come a long way since it was colloquially known as "Clown Co.” The website has since gotten a real name, design raves and 10% of the online video ad market.
And as video sites like YouTube struggle to bring in ad revenue and portals like Joost shutter, Hulu's network supported business model seems even stronger.
Today The New York Times discusses the reasons why Hulu works. Mostly, it's because they just throw network content up on the Internet unscathed.
According to Saul Hansell:
"The business model of TV networks is free programs paid for by ads. There is nothing technically or financially revolutionary about putting shows on the Internet. And thus the networks didn’t have a weak spot that could be exploited by a newcomer, as Kazaa and Skype did in their industries."
With the networks on its side, Hulu has seen impressive growth. But when and if the networks decide to diversify their content online, or more disruptively — charge users for it — Hulu will be in a perilous place.
Hulu's design features have drawn viewers and much praise, but Hansell thinks its the site's branding that keeps people coming back for more:
"Not only did Hulu have something people wanted, it had a brand promise that was clear and distinctive: Hulu is where you go for network TV. That’s different from YouTube, which is where you go to watch the biggest collection of video that isn’t on TV. Hulu, in effect, is Amazon.com to YouTube’s eBay. Meanwhile, the brands of all the other video sites—Joost, Veoh, and so on—didn’t mean anything in particular at all. It certainly helped Hulu cement its position as the icon for professional content that the company built a particularly attractive and easy-to-use site. But I think being first with a critical mass of content and the right brand position was more important."
Hulu is where viewers go to see network content because that's where most of the content is right now. But some networks are experimenting with streaming content on their own sites, and channels like CBS and ABC currently stream their shows on YouTube. If that continues, Hulu won't be the only place web surfers go for TV content. And while Hulu's viewing experience might be more seamless than on a site like YouTube, it also isn't hard to replicate.
A bigger concern could be if the networks start asking viewers to pay to see network content online. Rupert Murdoch's NewsCorp. has been threatening to charge for access to Hulu content, which could both shrink Hulu's viewer base and hurt ad revenue.
For now, Hulu is focusing on being the place where viewers look for television content. But just yesterday, it looked like viewers were going everywhere online to see video of Michael Jackson's memorial service.
Akamai says it saw 3,924,370 visitors on its “Net Usage Index for News” yesterday. Which is nearly double the average daily traffic of 2,000,000. CNN.com's live stream, which was integrated with Facebook Connect, drew 11.8 million unique visitors and 9.7 million live video streams by 5 p.m. MSNBC claims three million live streams. Elsewhere, The New York Times, MySpace, E! Online, FOX News and ABC also streamed the footage.
Hulu has yet to release its numbers from its live stream, though the company did say that it was the second most popular live stream after Obama's inauguration speech. But yesterday's livestream proved that the networks don't care where their footage is going when they sense that users want to see it. And unfortunately for Hulu, users don't seem to care where they're viewing it either.