• BusinessWeek, Tuesday, March 31, 2009 1:30 PM

Hulu may have had the biggest surge in unique viewers of any online video site in February (according to comScore) but it's not getting the advertising revenue to match, according to BusinessWeek. The joint venture from News Corp. and NBC Universal also faces several other roadblocks, including limits placed on the service by its parent companies.

Analysts are already revisiting their forecasts for ad spending on Hulu and other online video sites this year. BusinessWeek's Douglas MacMillan talks to Screen Digest analyst Arash Amel, who revises his 2009 revenue estimate for Hulu down from $180 million to $120 million. This is still double what Hulu made in 2008, but it's "disappointing" given the traffic surge. "What we've seen is rapid growth in consumption, but the advertising isn't keeping up," Amel says, adding that Hulu has only sold about 60% of its ad inventory. In response, Hulu spokeswoman Christina Lee said, "I don't think that anyone can say they are impervious to the macroeconomic environment, but we're still hugely optimistic about our ability to monetize the service." She added that rapid growth makes it "more challenging for us to project our future inventory accurately."

Meanwhile, Jason Blackwell, an analyst at ABI Research, points out that advertisers are probably less likely to experiment with new forms of advertising in the current economic climate. "Right now, advertisers are trying to cut back anywhere they can," he says. "So unproven models like Hulu are usually the first things to go."

Read the whole story at BusinessWeek »