Will Hulu Wipeout The TV Networks?
It has been claimed by analyst, Laura Martin that Hulu – internet tv website numero uno could well be the spark that blows away the nations network television empire into the stratosphere. A new report by the analyst from Soleil Securities, she predicts that the catch up tv and movie website is going to sting the networks around $920 for each viewer they currently have in advertising revenue, when that audience are no longer there. The networks worst nightmare of Hulu taking viewers away is destined to come true.
Back in May she also sounded alarm bells by warning that the entire $300 billion market valuation of the television industry is threatened by the shift of programming from TV to the Web. Spearheading the overthrow of television as we know it is of course Hulu, the top tv website showing streaming content from over 120 partners.
As of July, Hulu had grown to 38 million monthly viewers who watched 457 million streamed videos, making it the sixth-most-visited video site, ahead of competitors like AOL, CBS Interactive and the Turner Network, according to comScore.
On the financial side, Martin estimates that in 2009 Hulu will still lose money. $33 million on revenue of $164 million. NBCU, News Corp. and Disney are believed to keep 75% of estimated revenue, or $123 million. With a rapidly growing audience, high-quality video and increasing revenue, Martin has little doubt Hulu will succeed in the long term.
In its success, however, lie the seeds of value destruction for its TV network creators. Martin’s prophecy of doom is built on the assumption that the more content that becomes available on Hulu, the more likely it is that consumers will cut the cable cord altogether. Coupled with that trend is the less attractive economics of online video, which may offer higher CPMs but fewer ads.
The report derives the figure of $920 per viewer lost to Hulu by estimating that Hulu runs four ads each hour at a $50 CPM compared to 32 ads during each hour of programming on TV at a $35 CPM. ($1,120-$200 = $920). Hulu has not disclosed actual ad sales or ad rates.
“This alternative is much worse than keeping 100% of the ad revenue from the TV,” wrote Martin. “Long term, we don’t expect the internet audience to ever put up with as many commercials as there are on TV.” She adds that the convergence of the PC and TV over the next two years will hasten adoption of the PC as an alternative for watching high-quality programming.
The report assumes the bulk of Hulu viewers use it as time-shifting device to catch up on shows they missed on TV and to avoid commercial interruptions. Hulu CEO Jason Kilar in April told Bloomberg that the site wasn’t stealing customers from cable television.
What would be useful is specific research looking at the impact Hulu has had on users’ TV viewing habits to inform the debate. While citing comScore figures showing the growing audience for online video (158 million in July), it doesn’t take into account Nielsen’s most recent Three Screen Report, which showed that people on average watched 141 hours of TV compared to three hours, 11 minutes of Internet video in the second quarter.
How can the networks survive even if the threat from the Web isn’t imminent? Martin points to efforts like TV Everywhere, the Time Warner-led initiative that would require people to be cable subscribers to watch TV shows online.
Or they might adopt the approach of CBS, which aggregates all its viewers and sells them to advertisers at the same network CPM of $35, whether it was watched on an actual TV or its TV.com portal. There’s also windowing — holding programs off the Internet until after they aired on broadcast TV or through syndication — and simply charging an upfront fee as on iTunes.
If nothing else, the report suggests the networks should at least quit airing those popular Hulu commercials starring Alec Baldwin as an incognito alien using Hulu as “an evil plot to destroy the world.”
But Martin is not amused: “Moving viewers from the TV to the PC is value-destructive, and adding to the losses of Hulu by spending money on advertising destroys value faster.”
Lets just hope the netwaorks dont look into this too hard, because it wouldnt be too hard to shut down Hulu – As they own it.
Related posts:
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- Hulu fourth biggest TV streaming site in February
- Hulu makes watching TV sociable
- Hulu getting tough with TV.com and Boxee
- Hulu tv content to go international?
HULU LIKE ALL OTHER FREE INTERNET T V PROVED MY CASE. I WIL LWIN ALMOST A HBILLION DOLLARS SINCE I PREDICTED THE INFRINGEMENT AND VUILATION OF FCC AND OTHER FEDERAL RULES AND REGULATIONS GOVERNING TV.
INTERNET WILL NEVER TAKE OVER NETWORK T V – JUST AS THE STOCK MARKET MANILPULATION TRIALS AND INVESTIGATIONS ARE COMING UP SO WILL THE INVESTIGATION OF INTERNET TV PROVE MALICIOUS INTENT TO SABATOGE NETWORK – COMMERCIAL ADVANTAGFES WHICH INTERNET CAN NEVER HAVE AND BELIEVE IT OR NOT SPONSORS DO NOT MAKE MONEY FROM INTERNET INTEFERENCE AND FORCED ADVERTISEMENT ON INTERNET SITES WHIC YOU MUST PAY ACCESSOR FOR AS OPPOSED TO T V GETTING PAID AND PROMOTIONAL SALES AND SERVICE OR BOOST FOR COMPANYS WHICH DIS-QUALIFY CABLE AND INTERNET-
ONE- YOU CANNOT GET A MILLION DOLLARS FOR A COMMERCIAL ON THE INTERNET BUT YOU CAN FOR NETWORK T V,
2, YOU CAN NOT MAKE THE MONEY ON CABLE YOU MAKE ON NETWORK FOR ADS OR EVEN RESIDUALS OR ROYALTYS FOR ALL THE PLAGARISISM AND THEFT OF SHOW IDEAS FROM CAMERAS SITTING IN FOLKS BACKYARDS S TEALING IDEAS-
I SUSPECT YOU AND THOSE OF YOU WHO CLAIM OWNERSHIP AND PAY NOP LINE ACCESS FEES OR REAL LISENCE FEES AND OWNER ROYALTYS WIL LSUFFER AS YOU PAY ENORMOUIS FINES FOR VIOLATIONS- THE JAY LENO FIRS T SHOW I PREDICTED THIS MANY YEARS AGO AND YOUR COMMENT WINS ME MY BET.
THANKS – RAS-VIACOM
ONE LAST THING THE CIVIL RIGHTS CONSPIRACY CASE WILLL ALSO DELVE INTO THE AUSE OF INTELLECTUAL OPROPERTY – T NT- OTHER CABLE STATIONS AND C B S – PRODUCERS – EN-ETHICAL AND UN-PROFESSIONAL JOURNALIST -AUTHOR -WRITER TACTICS-
THE CRIME IS THE MEDIUM YOU PEOPLE ARE TRYING TO TAKE OVER IS ALREADY OWNED AND THE STOCK MARKET WILL REFLECT AS THE EURO DOLLAR AND THE VALUE OF THE US DOLLAR AS WELL AS THE INTEREST RATE OFFERED DBY THE FEDS- WHILE YOU LOOK TO ESTABLISH NEW BUSINEESS CHECK OUT THE NUMBERS- YOUR COMMENT AND ATTACK ON NETWORKS WU=ILL COST YOU MORE THAN A MOUTHFUL OF TEETH.
BOW AND ARROWS WILL NOT WORK HON- TECHNOCRACY-TECHNOLOGY AND TECHNOCRATS – FAILED- THE NETWORK HAS THE POWER TO CLOSE DOWN THE INTERNET AND CABLE SINCE RAS-VIACOM’S OWNER CREEATRED AND DESIGNED FIBER OPTICS. GET THE INFO RIGHT – ,MICROSOFT-DELL-DESKTOP=LABTOP=
CELL PHONE AND CAMERA PHOMNE – THE DOOR KNOB INVENTION OPENED UP ALL OPTICAL -VISUALS AND ALL OF YOU ARE IN VIOLATION=- BE CAREFUL- THE INTERNET IS DUE FOR A CHANGE AND YOU ALL WILL BE SWEPT AWAY LIKE THE FAKE VIRALS BEING SPRAYED – HINI FOR PROFIT.