We partner with YouTube, MySpace Tv and Hulu - as well as 50 other distribution partners - so we have an interesting vantage point into each partner’s strength and challenges.
Despite cracking the Top 10 list of most popular video sites, some are quick to point out that while Hulu is racking up content rights, it has not yet shown the kind of traffic that the leading sites do.
Technically, that is true. But bear in mind that Hulu launched last year. More importantly, Hulu is a classic textbook example of the quality vs. quantity argument and how so many people misunderstand advertising.
When I talk to VCs, sometimes they sheepishly ask “how quickly can you generate 100M streams per month?” I remind them that most traditional media companies don’t clock in 100M streams per month. But more importantly, I stress that “UGC aggregator sites need to hit lofty figures because their inventory is crap, but if you have quality content, you can build a very profitable business with less inventory”. It’s like speaking English to a Martian, admittedly… and the Hulu criticism is awfully similar in tone.
Like MySpace TV and YouTube (and in fact, Veoh, Metacafe, Break, Daily Motion, Revver, Joost, etc.), Hulu is a free, ad-supported video site. We’ve already seen marketers totally reject user-generated content sites and social media begin to fizzle. In other words, while Hulu definitely welcomes more traffic (and their execs stay up at night looking for ways to reach more people), it is probably more concerned with securing high quality content (shameless plug, such as ours) because that is what advertisers want.
I’d argue it is most concerned with getting great content, more frequently… because frequency is almost everything online. But that is a separate point.
We love YouTube, MySpace TV and all of our partners, but while YouTube might have billions of video streams per month and nearly 75% market share, but the ratio of quality to crap is low, meaning that it cannot forecast and guarantee inventory that advertisers book. This is why YouTube adopted a “sell it your own damn self strategy”, by the way.
Remember, if an ad agency books 1M ad impressions but only gets 750K delivered (for example), it not only leaves 250K imps and the corresponding revenue, it also did not necessarily spend that money elsewhere… with Hulu, sure, they cannot promise a billion impressions (for example), but what they promise is 100% sellable.
MySpace TV and YouTube can generate billions of ad inventory, but “pound for pound”, it is harder for them to generate high-quality inventory to meet advertisers’ demand. With Hulu, sure, they generate far less inventory for advertisers now, but the inventory is 100% sellable and in-demand. I am not sure the Most Popular Videos on YouTube are all that sellable… and even the stuff that is legit is probably more of a promotional nature and not commercial. More on that here.
Anyway, for what it’s worth, I see YouTube, Hulu and MySpace TV each charting a different course anyway… and while all three will remain successful, they will face some challenges… but that won’t stop the media from misunderstanding the strategy that each player needs to undertake to remain relevant and thrive in the months and years to come as video advertising in the US alone grows from $439M in 2006 to $7.1B in 2012 (it was $750M in 2007 and is $1.25B in 2008).
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October 21st, 2008 at 2:42 pm
[…] = 1,378 streams per partner per month. While this seems low, it’s the quintessential quality vs. quantity dilemma. For the record, I think Blip.tv is going about it the right way, foregoing the UGC or […]