The co-venture of NBC Universal and News Corp.'s Fox already is the sixth-most-viewed online video hub, providing insights into how consumers transfer their television viewing preferences and habits to the Web. Here's what Hulu CEO Jason Kilar told MediaPost about that future.

MediaPost: What important difference is Hulu making to the evolution of online video?

Kilar: One of the most important new notions is that users can transport their favorite content--right down to a specific moment--to their social networking page or blog, or email it to friends and start a conversation around it. That creates newness to what has been a relatively static experience, which is sitting down and watching 22-minute episodes of something. Now, we are seeing so many people watch a two-minute clip of SNL in ways they never watched before.

MediaPost: How will worldwide pickup of the Sarah Palin "Saturday Night Live" clips influence your decision to expand globally?

Kilar: It confirmed what I have always believed: that it is so easy to underestimate consumers' appetite for good content. When you marry good content with innovation that makes it easier to consume, demand grows. The Sarah Palin skits on SNL were really good and timely content. So, that it was being accessed 24/7 and syndicated everywhere on MySpace, Yahoo and so many other places didn't surprise me.

The concept of Hulu is predicated on being a global business. Our mission statement describes us helping people to find and enjoy the world's premium content wherever and however they want. That will be predicated on finding the right partners and having a business model that enables us to create value for advertisers, content partners and our shareholders.

We are able to measure on a daily basis (mostly geo-filtered access logs) what the latent demand might be for content all over the world for a Hulu service overseas. We are obsessed about it. The majority of our team has worked in global positions; I was global when I worked at Amazon.

MediaPost: What have you applied to Hulu that you learned at Amazon?

Kilar: Believe it or not, I'm probably taking even more from the few years I was at Disney's theme park business and my two years at Disney Design Development that included Imagineering. The theme parks have always been a cut above the rest because of the high-quality standards and the attention paid to every last detail. So we have been unusually obsessive about the layout of Hulu. We sweat over every pixel and element of the user experience the same way Disney street sweepers sweat over every square inch in their parks. Our technology is so intuitive--the users don't even notice what we are really aspiring to.

MediaPost: How else will you use technology to take Hulu beyond where it is today?

Kilar: There are a couple of ways technology is being invented and then leveraged to provide a new experience in discovery. Even with more than 100 content partners, technology makes it a delight to browse, search and then discover the content. We are doing a lot of work on applications that will aid users in discovering relevant content they may not know exists once they tell us about their interests.

MediaPost: So it's like hyper-targeting for content?

Kilar: Exactly. We're also leveraging new technology by making sure that the advertising is relevant and solicits a better response. Advertisers will be more than willing to pay dearly for that type of a service. So, having much more relevant and engaging advertising is critical in all of this. We're starting to do this already by allowing users to choose their own ad--to watch a full movie trailer instead of watching traditional commercial spots during or before a program. All of these things serve to put the user in charge and to heighten their level of engagement so that recall and response rates are so much higher. There is already a migration of advertisers who are willing to invest in that kind of high-value video advertising.

MediaPost: When will users be able to search for specific brand or product advertisements?

Kilar: We don't have that today. What you describe is something we could do rather quickly, in a matter of months. The most important element of that whole equation is to assemble a very large library of advertising to utilize. We have been very fortunate to go from 10 charter advertisers to over 100. I would not be surprised if that number in the fullness of time gets to be over 1,000 advertisers. That's when you can have a substantial body of advertisers in any one category for users to choose from if they are interested in a product. So, the thing we have to drive is the volume of advertisers. Relevant adverting is not only a function of the algorithms we can write, but the data set--or library--under it.

MediaPost: Will Hulu eventually provide content downloads instead of losing that business to iTunes and Amazon?

Kilar: That's absolutely fair. I absolutely believe the streaming business is and will be a bigger business than content downloads. The main reason is that it's instantaneous and people are spending more time being connected. The notion of downloading heavy files to a device that takes up a lot of space is something that had value several years ago when we were not connected all the time. So, the bigger opportunity for users is to focus on the streaming part of the business.

MediaPost: What kind of metrics do you see the need to develop for your own space?

Kilar: There are different metrics that would be helpful to an advertiser, content partner or even to a user. The one that is most basic for us is the size of the audience that is watching your content throughout the day--what the trending is. We'd love to know from an advertising perspective not just how many people are watching and where, but also their recall rate and their intent to purchase. Those are the things we are very careful about measuring, and the good thing about the Internet is that you are able to capture these metrics. So, we are able to have very good transparency in real-time. The user data we log gives advertisers a visibility into the business they've never had before.

MediaPost: Will Hulu do for television and video what the iPod did for music?

Kilar: I would regret it if in the fullness of time, Hulu could not be accessed in places it is not available today. The biggest trend in online video is where and on what people will watch. The access point is not long just the PC; appliances like refrigerators are connected to the Internet. When you take away all the barriers to finding content, the best content rises to the top.

MediaPost: How much of Hulu content should continue to be original versus recycled?

Kilar: Because there is so much library content out there, it will remain the biggest bucket of premium content, as well as current content. The area that will grow the fastest is original content, like our Dr. Horrible. The big question is, what will users care about?

MediaPost: How will you continue to differentiate in an increasingly crowded online video space?

Kilar: I am not surprised that so many players are answering the market. At the end of the day, what differentiates Hulu is our culture. And we are nothing if not obsessive about our culture. And one aspect to that culture is our neurotic devotion to quality. That really is what drives the Hulu engine. Tenacity and speed of execution are critical. The fact that we are a start-up is a very big advantage in that we are not dealing with an existing or legacy culture we are trying to refashion. We have a custom-created culture for our mission.

MediaPost: Do you need to attract any more capital investment or take on new equity partners?

Kilar: We're all good in terms of our $100 million-plus investment capital. We're very frugal. That is a very generous amount of money, and we're being very careful with it.

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