Hulu and YouTube: The Convergence of Online Video Market Strategies

Hulu YoutubeAn online video war has been going on for several years now. First, YouTube opened the online video business flood gates when it sold to Google for over a billion. This sale, and Google’s evident “crystal ball” powers for all things “Internet” back then, led to the emergence of dozens of competitors. First Veoh, then Joost, and a whole hierarchy of what were termed “Web 2.0 startups”, scrambled for what is in effect the Web’s most successful “audience” – video lovers. With Disney’s abandonment of the others, and its investment in Hulu, the video game on the Web may never be the same. News of Joost’s effectual failure will certainly have the others fighting over that share of the market, and if Hulu can grab it all, perhaps YouTube may have reason to worry.

From the perspective of a writer and beta tester for virtually all of these video startups, one thing former Joost CEO Mike Volpi pointed out rings true for the online video market:

“The challenge that Joost had throughout its life was that it had virtually no access to exclusive content.”

This can be said for all the competitors in this space as well. With Hulu emerging as what may be a sort of “movie channel” for online video, Youtube garnering what we might term “video bit entertainment”, it seems apparent that Hulu would garner most of Joost’s video users because of the similarities in the two user groups. I know, I am condemning Joost to the “dead pool”, but this seems pretty obvious for me. With Veoh’s “TV” aspect all but dead, and YouTube’s similar difficulties with copyright, predicting a polarized online video market is a sort of no-brainer.

hulu vs. youtube

Online video has always been one of the most interesting market segments, as well as a conduit for seeing into the future of traditional business integrating onto the Web framework. Veoh founder Dmitry Shapiro is a good example of a next generation of Web developer who saw many of these obstacles from the start. With the introduction of Veoh TV atop essentially the same user base YouTube garners, Dmitry established a core constituency of users and a very good brand recognition strategy. In the end, the founder of Veoh was much more flexible than his counterparts at Joost and other video startups. However, as Volpi and the consumer suggests, content like that which Hulu is now solidifying, will determine the winners and losers for the online video market.

Hulu Youtube Video

Hulu sends a powerful message – Get what you want – Free!

Joost, YouTube, Veoh, nor any other major player in this market has been able to successfully pen a deal with major content providers. Disney and others investing in Hulu, in a way, reveals mainstream broadcast media’s hand in as far as their intentions for online distribution of their wares. For Dmitry and Veoh, in particular, gaining “legal” access to great content is fundamental for their continued success. One thing about Veoh that was so rewarding (if eventually unfeasible) was their, shall we say “Pirated” movie content. As for YouTube, I think TechCrunch’s clairvoyance with regard to Hulu is a little pre-mature. There are after all, different kinds of good content. Full length motion pictures and TV shows is, of course, fantastic for the end user. However, YouTube as an instrument of global video absorption is, well, insurmountable. For Hulu in particular, and to the chagrin of this writer in Germany, their service is for the US consumer only.

If the reader can wade through all this verbiage about online video, several things might be apparent. First, the deal between Hulu and Disney is huge. It effectively drives Joost and any other “one trick pony” video aspect out of business. Secondly, YouTube may never even need to feature the same kinds of content Hulu does. Finally, anyone wanted a share of this market needs to understand what Joost and others have learned (all be it a little too late). No matter what the innovation or technology involved, people (users) will always gravitate to whoever gives them the best content.

In the case of online video, this means user generated “real time” content like that present on Youtube, and highly refined and produced content like that from Disney and other traditional producers. For my friend Dmitry at Veoh, I suggest grabbing as many independent movie and television executives into your board room to sign for the last bits of great content not under the control of major media. Perhaps a coalition of independent art via Veoh?

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