Maybe you’ve read some of the headlines this morning about the NBC and Fox-backed online video site Hulu “catching” or getting “bigger” than YouTube. Hopefully you read deeper into those articles, because while the headlines suggest that Hulu is catching YouTube in traffic, that’s not the case. What they mean to say is that Hulu could match YouTube’s U.S. revenue by next year, according to The Financial Times.
And really, that’s not all that surprising. Everyone knows YouTube is having trouble monetizing its huge traffic. The issue is that most of its videos are user-generated and, thus, hard to pitch to advertisers. Compare that with Hulu, which has all professional content from television networks like NBC and Fox, as well as some feature films. Advertisers know how to work with these, and they do so with big brand pre-rolls (ads that play before the shows start) and mid-stream advertising.
But YouTube is showing signs of coming out to meet Hulu in the professional content arena. While it’s been showing CBS shows for a while now, the Google-owned company recently signed a deal with the movie studio MGM to show some of its older films on the site. It also previously reached a deal to put popular clips from Lions Gate films on the site. All of these seem like baby steps towards becoming more like Hulu, just much larger and with the user-generated content element (and perhaps even a live-streaming element eventually).
That doesn’t even take into account such elements of YouTube as President-elect Obama’s decision to use the site to send out his weekly video addresses and the possibility of a live-streaming YouTube service. Both should make the site even more popular.
And that’s really the key. At the end of the day, look at YouTube’s traffic compared to Hulu’s. While Hulu is growing pretty quickly, it’s still nowhere near YouTube. Depending on which analytics company you ask, YouTube has anywhere from 60-80 million visitors a month. Hulu is more like 3-6 million. Could Hulu eventually catch up? Sure, but it’ll take a long time and assumes that YouTube doesn’t strike similar deals to its MGM one with Hollywood.
But Hulu should draw hope from MGM’s co-president Jim Packer, who upon signing the YouTube deal said:
“We will have some long-form videos up on YouTube, but I don’t think that’s the platform to have 30 or 40 movies up at once,” Mr. Packer said. “I feel much more comfortable doing that on a site like Hulu.”
Still, that is one Hollywood exec giving his thoughts. It’s probably just as likely that Google figures out how to monetize YouTube and its revenue explodes.
Update: MediaMemo’s Peter Kafka spoke to Arash Amel, the analyst behind the numbers the Financial Times used. Amel believes that Hulu is already profitable. For net revenue, he thinks Hulu is making around $12 million a year right now. If YouTube is still losing money every year (which a lot of people assume), that makes Hulu more profitable than YouTube right now.
Of course, Kafka’s former associate at Silicon Alley Insider, Henry Blodget takes exception to the idea that Hulu is already profitable. “We’ll believe it when we see it,” he says.