Can Hulu Be A Bigger Business Than YouTube?

Google’s foray into the online video market has been criticized by many. In fact, some believe that Google’s decision to acquire YouTube was one of the worst it has ever made, thanks to the confluence of massive copyright violations and Google's financial backing, which gave copyright holders the impetus they needed to sue the popular site. Others believe that Google’s decision to enter the online video market and become a quasi-content firm wasn’t the best way for it to capitalize on the booming video advertising business. Either way, Google is now wholeheartedly invested in online video and YouTube is the centerpiece of its strategy. YouTube may be wildly popular, but Google’s ability to realize a profit has been difficult, at best. The company spent $1.65 billion for YouTube and so far, it has yet to find a way to monetize it effectively and realize a positive return on its investment. Hulu may not size up well against YouTube – in May 2008, Hulu served about 88 million videos compared to YouTube’s 4.2 billion videos – but it has the luxury of monetizing the vast majority of its videos instead of the three percent that YouTube can sell ads against. Three percent of 4.2 billion is 126 million videos a month that can carry ads—not much more than Hulu.