I have quite some favorite Web 2.0 sites that I visit daily. To name a few, there are online retailer Amazon.com, Internet search giant Google, and Hulu, my favorite video streaming site. I came to know Hulu at the beginning of 2009, and instantly got hooked on the content and features Hulu has to offer. I have become a huge Hulu fan ever since. In my opinion, Hulu is developing a very sustainable business model. There are 5 reasons explaining why the Hulu model will prevail in the coming years and why its videos will become mainstream very soon.
Before we dive into the 5 reasons, here is an interesting fact about how the Hulu name comes about. According to Hulu’s blog:
In Mandarin, Hulu has two interesting meanings, each highly relevant to our mission. The primary meaning interested us because it is used in an ancient Chinese proverb that describes the hulu as the holder of precious things. It literally translates to “gourd,” and in ancient times, the hulu was hollowed out and used to hold precious things. The secondary meaning is “interactive recording.” We saw both definitions as appropriate bookends and highly relevant to the mission of Hulu.
1. Hulu vs. Google
I have been reading Jeff Jarvis’ book “What Would Google Do?” lately. In his book, Jeff is touting about Google’s strategy to provide free tools for its users in return for the ad dollars charged from its advertisers. In fact, more than 90% of Google’s revenue is from ads. What Google is doing is noble and very similar to Hulu’s business model here. Hulu is able to make its movies and TV shows abundantly available and free for its users because it can charge a premium from its advertisers. The higher the traffic, the more premium it can demand and the more advertising partners it can have. Hulu is now gaining more and more momentum from its users, which allows the site to monetize even more in the near future.
2. Hulu vs. TV
According to Jason Kilar, the CEO of Hulu, people generally have a better recall of the Hulu ads than they do for TV ads. This allows Hulu to charge a higher CPM—or cost per thousand users—ad rate than its partner television networks. Plus, more and more TV audiences become Internet savvy today. They choose to watch shows on the Internet instead of on TV. According to Seth Godin, the old TV industrial complex is dead in today’s digital world. Moreover, Hulu has a huge collection of videos from the latest TV episodes to the popular comedy shows.
3. Hulu vs. YouTube
In terms of traffic, Hulu is still far behind YouTube. In fact, Google is currently struggling to come up with a viable monetization plan for YouTube. There is even one report that claimed that the YouTube service may lose $470 million in 2009 due to high bandwidth, licensing and other costs. On the other hand, Hulu is able to make inroad into the online video streaming market with its ad dollars supporting its continuous growth and expansion. In a report, one analyst even predicted that Hulu’s 2009 revenues would exceed YouTube’s. From this perspective, the Hulu model sounds a lot more viable in comparison to its counterpart.
4. Hulu vs. Torrent
Prior to Hulu, if you want to watch a high-definition full-length movie, The Pirate Bay is usually the option. However, the waiting time for the downloading to complete sometimes really kills our mood to watch the movie. Hulu has a perfect solution for this. It helps you avoid the downloading process by having you watch its 30 seconds sponsored commercials. Which one would you choose? I would go with Hulu. Furthermore, most torrent downloading is illegal.
5. Hulu vs. Other Web 2.0 Features
Hulu has plenty of killer features that make it a unique Web 2.0 tool. For example, it allows you to use Hulu friends, subscribe to your favorite show, embed a video, post a video, email a video, etc. These tools may not make Hulu completely stand out from other video streaming sites, but it certainly makes it more special. Another little feature I like about Hulu is the ability I have to cut out a section from a video clip so I can only embed that separate section on my blog provided I don’t need other parts of that clip.
Oh, did I mention that Hulu has not even gone international yet? All in all, Hulu’s future remains promising. As long as it doesn’t charge its users, my instinct tells me I should always stay on the same side as Hulu. What is your experience with Hulu? Have you benefited from the site and how would you rate it?
