Online Video Gets the Headlines, IPTV the Revenue

An interesting analysis from Telco 2.0 compares the business of YouTube versus Hulu in 2008. The table summarizes the key data used in the analysis:

YouTube Hulu
No of videos/day 1000+ million 3-4 million
Average duration 2.75 min 27.5 min
% clips with ads 3-4% 80%
Average CPM $10 $15-20
2008 Revenues $118 m $52 m
2008 Loss $91 m $9 m

According to Telco 2.0, YouTube would be generating revenues of $118 million, versus $52 million for Hulu, while the low percentage of videos carrying ads in YouTube would make them lose $91m versus only $9m for Hulu.

Hulu business model is closer to that of broadcasters and it shows in a better margin. To make their disruptive model fly in the next years, YouTube will count on:

  • decreasing costs of infrastructure: storage, processing, bandwidth and efficient data centers
  • ability to place ads in clips from amateurs and semiprofessional creators
  • agreements with media companies to become their online video platform in return of a share of ads

Meantime more players are coming to the party, like CBS betting on tv.com to compete with Hulu (NBC Universal and News Corporation’s online video joint venture).  But, in a crowded market, also others are getting weaker, like Joost giving up their P2P model and with few options to survive only as one more flash video site. Despite Joost’s announcement, do not discount P2P TV, that is far from dead in China.

As for IPTV, according to a report from Gartner in September:

“Worldwide subscriptions to internet Protocol television (IPTV) services are on pace to reach 19.6 million subscribers in 2008, a 64.1 per cent increase from 12 million subscribers in 2007, according to Gartner, Inc. Worldwide IPTV revenue is projected to total $4.5 billion in 2008, a 93.5 per cent increase from 2007 revenue of $2.3 billion.”

In 2008, no doubt Online Video got the headlines, but the IPTV Telcos still got the bucks.

3 thoughts on “Online Video Gets the Headlines, IPTV the Revenue

  1. Greg March

    As a media buyer I can say with some certainty, Hulu’s commands a significantly higher CPM and YouTube significantly lower than the Telco 2.0 model indicates. Main reason being that Hulu’s professional content is a better environment for advertisers. There are more opportunities affect the emotions of people when they are really moved by the content not snacking on it. Many advertising use video to play make their customers “feel” something.

    Interesting insight about IPTV though. I do imagine that the number of people willing to pay content through their IPTV system eventually hits a wall and ad-supported models that run through machines in the living room evolve and surpass it.

  2. Jose Miguel Cansado Post author

    Hi Greg, thanks for your views. Ad-supported models are sure to succeed, but Pay-TV could still co-exist, as it does today in the broadcast world. Internet makes ad-based TV richer and more interactive. IPTV should bring that richness and interactivity to Pay-TV.

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