• The Economist, Friday, February 6, 2009 11:45 AM

Online video, once heralded as the future of video advertising, has turned out to be a confusing format. Amid that confusion, Hulu.com, the joint venture from NBC and News Corp., seems to have the firmest grip on what consumers and advertisers want, according to The Economist.

When Google acquired YouTube in 2006, it seemed manifest that the online video sharing giant was the future. Two-and-a-half years later, advertisers still won't touch YouTube's user-generated content (still the vast majority of its content) "with a barge pole." In the meantime, traditional media companies started to pull their content from the Google video site and partner with Hulu, which only serves up professionally produced content, instead. According to The Economist, Hulu already has over 110 content partners.

Almost every permutation of an online video strategy has been tried. Amazon, Apple, Netflix, Joost, ABC, CBS and many, many others have attempted online video offerings of their own, with a variety of different business models and varying degrees of success. Still, none have matched the "phenomenon" that is YouTube. Even so, The Economist argues that YouTube "is not a business" whereas Hulu undoubtedly is. And while the joint venture is still far behind YouTube in terms of total number of users, it is not far behind in terms of ad revenue. More importantly, Hulu's revenue appears to be sold out, which puts the site "in the rare position of being able to increase inventory (through new content and more views) and make money from it."

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