November 18th, 2008

Hulu to Match YouTube’s Revenue: Ten Observations For The Future of Media

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An analyst at Screen Digest estimates that in “2008 YouTube will generate about $100m in the US, compared to about $70m at Hulu. Next year both sites will generate about $180m in the US.” That’s very significant because YouTube had 83m unique viewers in the US in September, while Hulu only had 6m.

Here, in no particular order, are ten observations you could make from this data, which speak to the the future of media:

  1. Professional content still has A LOT more value than “user-generated content.”
  2. Legal content still has A LOT more value than illegal content.
  3. Professional content produced for analogue media is worth pennies on the dollar when distributed in the web’s commoditizing content marketplace.
  4. It probably costs a lot more than $180 million to produce the content on Hulu, which means that it’s not a standalone business.
  5. Ads inserted into online video are about 1,000 times more annoying than TV ads (I say this having watched many shows on Hulu) — losing control of your content is not a web-native experience. This suppresses advertising value.
  6. TV/Video will likely follow the path of music and newspapers in suffering a dramatic decline in content value on the web.
  7. Video is probably not a panacea for newspapers trying to reinvent their businesses on the web.
  8. Most analogue media businesses, when fully transitioned to the web, will likely bear little resemblance to the original businesses.
  9. Google isn’t doing any better than anyone else at solving the content commoditization problem on the web.
  10. Six years after Google perfected search advertising, there has been no innovation in online advertising that even comes close to the same scale.
  • Imagine a global version of MTV without the restrictions of having to be on a cable package or satellite – that can be viewed on mobile devices. If I was an advertiser like McDonald’s, Toyota, Pepsi, Coke, etc., I would chomp at the bit to have the ability to tie my products to the content on that platform. That day is fast approaching. Mark my words! Youtube had its first live broadcast, which I thought gave a good glimpse into the possibilities for social media. However, their biggest problem is that they do not really have a major music community like Myspace or Facebook, so the content of the program was a bit novelty. No, all social media really need is a few more visionary thinkers.

  • TV/Video will likely follow the path of music and newspapers in suffering a dramatic decline in content value on the web.

    Sure when the next best thing comes along.... all got subverted by a new product.

    Video is probably not a panacea for newspapers trying to reinvent their businesses on the web.

    Some papers with large enough branding could make the transition to an online newscenter.

  • Maybe time to move away from the old interrupt and repeat forms of advertising (online or off-line) and focus on customer engagement, permission based and context sensitive.

    A pay per click interactive hotspot on any video layer is the future for video revenue models but the problem then is the efficient tagging, indexing and management for content producers.

    Make good, targeted, entertaining and engaging content and it will spread.

  • Liz

    "the content commoditization problem"

    I'd like to see a whole post about this.

  • The three things in there that strike me as being absolutely key are:

    - professional content = highly valuable
    - legal content = highly valuable
    - online content = a commodity

    how do you reconcile those three things into a business?

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