Digital Pennies For Hulu Now Nearly A Couple Of Quarters -- Is That Enough?


Digital video may still have its issues when it comes to advertiser metrics -- but growing dollar signs now speak for themselves.

Hulu chief executive officer Jason Kilar says the premium digital video site will pull in $240 million this year in advertising, more than double its $108 million take in 2009. Kiler says 41 cents -- almost two quarters -- of every dollar generated from video content is from advertising, while 30 cents is from subscription fees.

Hulu has had some 352 different advertisers so far buy video messaging. While we don't know the size of these marketers, this would seem to correspond to the 300 to 400 upfront TV advertisers networks regularly get to appear on their airwaves -- typically your bigger year-to-year advertisers.

More perspective: Hulu's ad revenue is roughly equal to what a mid-size cable network can tally in yearly sales, or what a mid-size cable network might get from cable operator subscriber fees. Taking into account Hulu's short three-year history, these are pretty good metrics.



The bigger YouTube, of course, has better results: some $500 million in ad dollars, though much of this comes from display ads, not the full-motion video ads that make up virtually all Hulu's ad dollars. Total video advertising dollars will get to $1.5 billion this year, according to eMarketer.

For all that Hulu crows about, the digital media ground can quickly turn to quicksand. (Just ask those once high-flying MySpace executives). In that regard, executives are more focused on what's next: the Google TVs, Apple TVs, and a host of new hybrid TV-Internet services, including new entrant Boxee.

Why are these so important? Because those are the viewers in front of pixels advertisers value most -- the bigger, lead-back TV screen, where advertisers are still habitually used to paying much more money for messaging than on other new digital platforms. That is still a $60 billion market.

Right now NBC, Fox, CBS, and ABC, haven't placed their bets on any of the TV-Internet businesses. One of the easiest questions to ask any of these big entertainment content machines is whether they want to be owners or joint venture participants in one of these more technology-driven services.

Senior TV executives, no doubt, must be mulling this as they block businesses like Google TV from taking their TV shows from the likes of Hulu and other digital places.

So for all the good news about Hulu, where does this leave the service -- especially with one of its three major partners changing ownership? We speak, of course, of Comcast's takeover of NBC Universal. Valuable content still seems to be a big push by entertainment creators. But with Comcast -- whose forte is TV distribution -- at the wheel, things might change.

In a rapidly changing digital media era, where hedging media bets is assumed the proper play, perhaps the Hulu brand will look to expand, or at least consider a joint venture with a Google TV or an Apple TV-like entity.

1 comment about "Digital Pennies For Hulu Now Nearly A Couple Of Quarters -- Is That Enough?".
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  1. Brian Hayashi from ConnectMe 360, November 11, 2010 at 4:32 p.m.

    Cable, Hulu, Netflix and Apple iTunes all work because they have proven their ability to make money for the studios in a way that supports multiple distribution windows with minimal cannibalization. Consequently investors attribute higher valuations for each new subscriber.

    When Google TV, YouTube or Boxee can do the same, perhaps then we'll see aggressive venturing along the lines you describe. Along that vein, I expect to see more packaging of content similar to boxed DVD sets and commercial licenses.

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