It's not the first time Martin has sounded the alarm on the rise of online TV. In a May report she warned 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 TV-as-we-know-it is Hulu, the premium video site backed by NBC Universal, News Corp. and Walt Disney Co. that offers content from 120 partners from the Food Network to Paramount Pictures.
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.
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=113407
Posts
1 comment:
I think the networks have unleashed a monster in Hulu, but then they can always shut it down. Good blog post about it here:-
http://www.worldtvpc.com/blog/will-hulu-wipeout-the-tv-networks/
Post a Comment