Dish Network in Line to Get Hulu?

Hulu has not announced any decision on whether it will sell, or to whom it might sell. There are reports Dish Network was the highest bidder, coming in around $1.9 billion, topping both Amazon and Yahoo. Google bid much more, something in the range of $4 billion, but Google wanted special conditions. Google wanted more content for a longer period of time, and perhaps other concessions as well. Highest Bid For Hulu

But the bidders all figured out pretty quickly that the TV companies who own Hulu now want to phase out free ad-supported content completely. So as soon as the current set of Hulu contracts expire in a couple of years, it would be back to the negotiating table. In other words, aside from buying the brand, and some back office technology, the new owners would not be acquiring the existing set of content offerings, which is the whole point.

In April 2011 Jason Kilar, Hulu CEO noted that the company was on pace to approach half a billion dollars in revenue in 2011. In the first quarter, Hulu revenue grew approximately 90 percent over the first quarter of 2010. (Hulu did $263 million in revenue for all of 2010).

The content community will earn approximately $300 million through Hulu over the course of 2011. Hulu served approximately 50 percent more advertisers in the first quarter of 2011 than in the first quarter of 2010. Hulu revenue growth

Any new buyer would have to commit additional funds to get continued access to the content underlying that growth, though. 

Will The Internet Displace TV?

Turner Broadcasting's Jack Wakshlag cites numbers saying the average American watches 32 hours of television a week while spending only 20 minutes on the web.

Meanwhile, Hulu CEO Jason Kilar has this opposing view. "If you talk to most human beings, they'll give up food and shelter before they'll give up their high-speed Internet connection," he says.

DEBATE: Will The Internet Kill Off The TV Set?

Hulu Blocks Google TV Access

Hulu apparently does not allow Google TV appliances to grab Hulu content.

Hulu is Thinking about an Initial Public Offering

Hulu Serving 3x as Many Ads as YouTube

Hulu generated 783 million video ad impressions in the month of July, more than three times the 219 million impressions generated by Google sites like YouTube.

There are a number of reasons for the disparity. YouTube does not try to display ads on all its inventory, while Hulu tries to.

Hulu features professionally-produced, branded video content with high end user interest. Not all YouTube content is of sufficient quality or interest to create much of an ad opportunity.

Also, Google advertising on YouTube also leans toward banner ads and AdSense text advertising rather than video spots, as Hulu features.

Hulu Serving 3x as Many Ads as YouTube

Netflix Edges Past Hulu In Total U.S. Traffic

Web traffic to Netflix was 20.2 million in June, 2010, just edging past Hulu’s 19.7 million.

It has to be said that most of the Netflix traffic likely was people updating their queues and so forth, while more of the traffic to Hulu was people viewing actual videos, but the traffic is some indication of the potential for Netflix to move into the video download space, some would argue.

Netflix Edges Past Hulu In Total U.S. Traffic (comScore)

Hulu Plus Not a Danger to Netflix

Barclays analyst Doug Anmuth does not believe Hulu's new subscription service "Plus" will harm Netflix subscriber growth, though it is the "first credible competitive subscription offering," especially for viewers who watch serials and other popular TV fare.

Netflix still is heavy on movie content.

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Hulu Growth Flattens

Hulu's growth, at least as measured by views, appears to have flattened over the last six months. On the other hand, it appears to be profitable, if not by much.

As it gears up to offer subscription plans, and more content moves behind a pay wall, growth might even dip a bit.

That's the challenge for any content provider that opts for pay walls: fewer users but more revenue.

Broadcasters Are Serving Up Lots of Web Video

Aside from YouTube, online video offered by broadcast TV networks and Web-only media brands, followed by magazine sites and music labels, seem to be getting the most traffic, a new study by Brightcove and Tubemogul suggests.

About 51.75 percent of viewers are navigating to video directly from the publisher’s main site. Google search drives 39 percent of viewing,  followed by Yahoo at 5.58 percent, Bing at two  percent and Facebook at 0.40 percent.

In the first quarter of 2010, the broadcast TV networks sampled in the study streamed 380 million videos, with Web media brands coming up close behind at 326 million video streams. However, the native Web brands, which include both video-only and general entertainment and news sites, saw 300 percent annual growth of video views in the first quarter, compared to 44 percent growth for the broadcast sites.

For all of 2009, Web media sites grew twice as fast as broadcast TV sites (165 percent compared to 74 percent). At this rate, they will overtake the broadcast sites in video views later this year, the study suggests.

In the first quarter of 2010, magazine-affiliated sites streamed 190 million videos, up 90 percent. In fact, magazine sites are streaming as many videos as music label sites, which came in at 191 million videos, up 60 percent.

Newspaper sites aren’t doing nearly so well, streaming 136 million videos in the quarter and growing five percent.  Newspaper sites are trying to catch up, though, and had two billion video player pageloads in the quarter (pages which loaded with a video player, but were not necessarily clicked on), compared to 1.2 billion for magazine sites, 760 million for Web-only media, and 670 million for broadcast TV sites.

But newspaper sites are having a real problem getting their audiences to watch videos, the study suggests.

For every two billion videos they throw in front of users, only 136 million get viewed (6.8 percent). Broadcast TV sites are getting 380 million views for every 670 million attempts (56.7 percent).
Even magazine sites are seeing a 12.7 percent hit rate.

But newspaper videos get viewed "to the end" more frequently than videos on other sites. The completion rates for videos on newspaper sites are 41 percent, versus 39 percent for magazine sites, 38 percent for broadcast sites, and 29 percent for music label sites.

Remember When Netflix Was "Toast"?

Remember when Netflix was supposed to be "toast"? You remember the arguments: Physical media was
out, online was in; Netflix was wedded to a dying business model. Online distribution, by YouTube or
Hulu, was going to destroy Netflix.

That hasn't happened. Quite to the contrary, investors have bid up Netflix's stock by nearly 100 percent
since January 2010, in part because Netflix shows every sign of being a contender in online video. And now Hulu has announced a "paid" access model that puts it in head-to-head competition with Netflix to some extent.

True, Netflix often is thought of as primarily offering movie fare, while Hulu's content leans heavily towards TV shows.

Netflix has 14 million paying subscribers, while Hulu has about 40 million unique viewers, but so far zero paid subscribers. And that is the test for Hulu. Most observers think perhaps five percent to 10 percent of Hulu users might choose to buy the new paid service, suggesting a potential base of two million to four million paid subscribers.

If one assumes four million subscribers, at a monthly fee of $10, that implies $480 million worth of annual revenue. That's interesting, but not terribly interesting.

No Daily Show, Colbert for Hulu

Viacom will remove “The Daily Show with Jon Stewart” and other Comedy Central television shows from Hulu the week of March 8, 2010, apparently unhappy with the incremental ad revenue the Hulu viewings generate, or other terms of the deal.

You might say it is a skirmish in the wider war over content pay walls and other ways content owners want to preserve the value of their copyrights in the online ecosystem.

Consider the move a vote to protect and preserve the value of multi-channel video distribution. that isn't to say content owners are averse to extended online distribution, only to note that, at the moment, the value of multi-channel revenue streams vastly outweighs what Viacom has been able to realize from Hulu distribution.

Comedy Central apparently will continue to stream full episodes of the shows on TheDailyShow.com and ColbertNation.com, where Viacom might believe it can better profit from restricting the content to its own sites.

Hulu executives say revenue for both “The Daily Show” and “The Colbert Report” had been growing. “In the past 21 months, we’ve had very strong results for both Hulu and Comedy Central, in terms of the views and revenue we’ve generated,” says Andy Forssell, Hulu SVP.

Three of the broadcast networks, ABC, NBC and Fox, own stakes in Hulu. Viacom’s decision may suggest that the economics of Hulu make less sense for content providers that lack equity in the Web site.

It isn't as though online availability now will cease. It is simply that viewers will have to navigate to the Viacom-owned sites.

No Daily Show for Hulu

Video Now Driving Bigger Access Bandwidth Packages, says Compete.com

How much Internet-delivered video is being consumed by users of sites such as Hulu.com or Netflix.com? According to compete.com data, Hulu.com traffic has grown 210 percent over the last year.

"If Hulu.com continued this growth trajectory for another year, we could see it break into Compete.com’s top 50, surpassing unique visitor traffic to sites like the NYtimes.com and Netflix.com," says Matt McGlinn, Compete.com writer.

From September 2008 to September 2009, Netflix.com’s volume of unique visitors viewing movies and other content online increased 163 percent, says Compete.com.

The good news for Internet service providers is that these trends will keep driving end users to buy access packages featuring higher amounts of bandwidth, says McGlinn.

Will Hulu be a For-Fee Service in 2010?

It looks like much Hulu content, especially network TV fare, will move to "for-fee" status sometime in 2010.  Hulu, owned by News Corp, NBC Universal and Walt Disney Company, is quite popular, attracting more than 300 million views in the month of February 2009, but ad revenues have been disappointing.

 “It’s time to start getting paid for broadcast content online,” says News Corp. Deputy Chairman Chase Carey.

“We’re exchanging analog dollars for digital dimes,” and that simply cannot continue, Carey says. “I think a free model is a very difficult way to capture the value of our content."

"I think what we need to do is deliver that content to consumers in a way where they will appreciate the value,” Carey adds. “Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business.”

Precisely what content will be "behind a pay wall" is not yet clear. Hulu is not likely to charge fees for all content on its site, but what it intends to do is not yet clear.

The planned move illustrates the continuing problem virtually all content providers and distrbutors are having with IP-delivered content: gross revenue in legacy channels is not being matched in digital channels.