Hulu and YouTube are two of the biggest names in Web video, but while one is struggling to turn traffic in to revenue, the other is concentrating on levering its content to make money.
YouTube is the unrivalled leader of Web video, a least in terms of traffic and mainstream appeal.
It is likely to be the only video sharing site that the majority of the population has heard of.
Traffic and Revenue
But as we’ve discussed quite a few times here on Web TV Wire, traffic doesn’t always equal revenue, a fact that is surely sticking in Google’s throat after it paid $1.65 billion for YouTube.
Estimates are suggesting YouTube will make between $300 million and $500 million in revenue next year, which while impressive, isn’t much from the amount of people who visit the site.
In fact, when you consider that around 4.2 billion video are served up by YouTube in a typical month, it’s a pretty poor result.
3% Monetization Level
The main reason for this poor return is the small percentage of videos that YouTube can actually monetize: less than 3% of all those millions uploaded to the site on an annual basis.
This is due to the copyright violation fears that Google has over monetizing potentially infringing content uploaded by the general population. Fears brought on by the $1 billion Viacom lawsuit currently ongoing.
Hulu Winning
Compare this to Hulu, the joint online video venture from NBC Universal and News Corporation, which because it only offers legally sanctioned professional television content, can place adverts safely anywhere it wants to.
Hulu has a fraction of the traffic that YouTube does, serving about 88 million videos a month, and only to American Internet users rather than the worldwide audience who use YouTube.
Despite these limitations, Hulu is expected to make around $100 million in revenue in its first year, with that figure set to increase massively in the years to follow.
YouTube To Evolve
This situation once again proves that professional content is where the vast majority of the advertising revenue is heading, and it means Hulu is in a much better position to make the most of that than YouTube currently is.
For YouTube to succeed, Google will have to shape its future away from user-generated content and towards the professional end of the spectrum via deals with media companies.
