MappingTheWeb //

Today, News Corp and NBC Universal announced the name of their much anticipated YouTube killer - Hulu. A couple of weeks ago, the unnamed venture raised $100 million via Providence Equity Partners in exchange for 10% of the company. A quick math calculation equates the valuation to a whopping $1 billion. While many scoffed at this ridiculous valuation, I’m not so quick to count out this potential industry player.

Why is YouTube as big as it is? Obviously their video widget provided a viral marketing channel, but that only funnels potential users to the site. It still doesn’t explain the ’stickiness’ and allure of the video-sharing portal. Nonetheless, it quickly becomes clear that illegal content is the driving force. YouTube is nothing with it. Millions of users hit the site everyday to watch music videos, TV shows, and movie clips. Not many care that Joe from Connecticut can juggle. The only exception I can think of are how-to videos. These non-commercial, useful UGC clips provide value to the viewer, regardless of whether you know the creator or not.

So how can Hulu compete against YouTube and the other big boys? Simple. Hulu has one thing that nearly all of other video sharing sites lack - the rights to production-quality content*. Sure, YouTube and others will continue to stream illegal content, but is this truly a sustainable long-term strategy? I’m not so convinced. What catapulted YouTube to the top in the first place may ultimately lead to its demise in the end. This is imminent flaw of social media. Just ask Digg.

So now anyone can watch legitimate, high-quality episodes of Heroes, madTV, 24, The Office, Family Guy, and Las Vegas (to name a few) for free, on-demand, anywhere in the world? Sounds pretty compelling to me. What does all this mean for traditional TV? Well, traditional folk can still view News Corp/NBC programming via the old tube, whereas tech-savvy users will turn to the Internet. Moreover, if you were to miss a given episode on TV or you happened stuck in Kenya without a TV, you can still tune in and watch on Hulu.

This brings up another huge advantage that Hulu has over the competition - a stunning revenue model. Hulu can command huge ad dollars and premium CPMs as they have complete control over the content. Furthermore, the site can leverage pre-existing relationships with advertisers at News Corp and NBC Universal. As opposed to traditional TV where viewers can’t click or ‘follow’ the ads, this form of programming is interactive and opens the door to new advertising opportunities. This conversion process is not only more effective, but also measurable.

It’s still too early to speculate the potential features and functionality of the offering. For what it’s worth, the portal may only stream old episodes or segments of episodes. I highly doubt this, but we will soon find out. Hulu isn’t currently operational. The home page is simply a landing page where interested parties can enter their e-mail to get a sneak peek of the BETA product when the time comes (apparently sometime in October according to Hulu).

I look forward to catching of glimpse of this potential industry-changing venture. Many aren’t giving it a chance, but I wouldn’t be so quick to make a judgment just yet.

*Note: As far as I know, there will be no user-generated content (UGC) on the site. It will strictly consist of company-owned premium content. Please inform me if you know otherwise.