• Silicon Alley Insider, Tuesday, March 11, 2008 10:45 AM

Hulu, the online video venture from News Corp. and NBC Universal, is finally ready to come out of beta. Just in time for its Wednesday launch, Hulu today is announcing the addition of Warner Bros. and Lionsgate. CEO Jason Kilar says 5 million people have viewed Hulu videos in the past month, an impressive figure given that the service has been in a closed beta test.

Impressive figure, impressive product, but Hulu is still "screwed." Why? Hulu looks great and all-and it's also easy to use, but it's still too dependent on a handful of content partners, it bears most of the costs of streaming videos while its partners take most of the revenue [Hulu gets between 20% to 30%], and its content partners are also its primary shareholders, which creates a major conflict of interest.

Hulu's been set up that way to make sure that it never becomes more powerful than its content partners. Hulu doesn't even have the exclusive online rights to its partners' (News Corp. and NBCU) TV shows and movies. Its partners also already offer most (or in some cases all) of their content online. Meanwhile, the company's economics will get even worse as video resolution improves, sucking up more bandwidth.

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