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December 10, 2007

Hulu hullabaloo

I've just received my invite into the Hulu private beta. For those of you who don't know what Hulu is, it's the joint venture between NBC Universal and News Corp to provide streaming episodes from the NBC and FOX networks (including the likes of The Office, Heroes, The Simpsons and so on) as well as clips and full-length movies on the Internet. NBC and NewsCorp would clealy like Hulu to become known as the "iTunes killer" (and possibly a Joost killer); Google, however, seems not that scared about the competition to YouTube, at least if its internal nickname for Hulu - "Clown Co" - is anything to go by.

Hulu is an interesting attempt by the networks involved to retain control of the distribution of their content (and hence 100% of the advertising take). So my principal interest in getting access to Hulu is to take a look at how they're monetizing the content - i.e. what ads are they showing, and how? They gotta pay for this thing somehow.

At least at the beta stage, the service seems very light on ads. The main player screen has only one small ad unit on it:

image

So most of the ad units are in-stream at this stage, it would seem. You're alerted at the beginning of a clip or episode that the episode "is brought to you with limited commercial interruption by...":

image

The ads themselves are (at present) 15-second slots. The dots on the progress bar (I think) show the ad positions - they also allow you to jump to a particular point in the episode. Here's an ad:

image

So far, the most striking thing about the ads is how terribly they're inserted into the video stream. They seem to come just a few seconds before  they should, cutting right into the dialog. I'm sure this is a teething problem, but it does raise the question of how well Hulu is going to monetize using this method, because if they're only going to go for single 15 or 30-second slots, they're going to need to insert quite a few per stream, and inserting them is going to be a challenge. Will it be automatic (in which case they'll surely cut across the dialog and spoil the viewer's experience)? Or will they employ people to place the ads manually (which is ok for the network content they're going to show, but not ok for the user-generated content they also claim they will make available).

At present, no other ad formats seem to be in place - no overlays, or contextual units alongside the video. I hope that Hulu is thinking about innovative ways to serve ads alongside this content, because otherwise they just won't make enough money off this service to make it worthwhile. And the need to compete with free(/illegal) fileshare sites just makes it more important to monetize cleverly. I guess maybe they're trying to attract a user base for the content at this stage, and then start to test monetization methods on them. That's probably how I'd do it.

Other thoughts on the service? Video streaming quality is good, but there's lots of jumping, and I couldn't view the video full-screen. The connection I was using whilst writing this was my corporate network, so that may be the reason. On the upside, the player itself is quite nice, with a nice feature to resume playing a clip where you left off, even if you navigate away from the clip and the site and return later. And there are some rudimentary social features, such as the ability to comment on/rate a clip.

Hulu also need to pay more attention to their beta invite process - they're currently accepting beta requests from people outside of the US, where the content can't be played. So they've got a lot of unnecessary griping going on in their comments, which they could easily have avoided.

So overall, a 6/10 for Hulu, from the perspective of someone in the ad industry. We'll see how it goes for them - they're certainly going to have a fight on their hands.

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