Hulu has got where it is today – a very popular and widely known online video service – by being free and full of great content. The question is, would the majority of people give up the free aspect in favor of more great content? Because that’s the reality Hulu users are facing in the future.

Hulu As It Is

Hulu has been built on the tenet of providing free premium content over the Internet using an advertising based model to first cover costs and secondly generate revenue. And it’s been a pretty successful strategy, allowing Hulu to build a sizable audience.

However, the company is still expected to make a loss of around $33 million this year, despite revenue of $164 million. So naturally the thoughts of those at or near the top of the companies who own and control Hulu have turned to whether a different approach would prove to be better.

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The last two years have seen online video reach the masses, and grow massively as a result. That trend has continued apace during the first half of 2008, with comScore revealing 12 billion videos were watched in the US during the month of May.

That 12 billion videos suggest a 45% increase on the same period last year, and shows a very healthy growth in online video. This is both from user-generated sites such as YouTube, and those providing streaming television, such as Hulu.

142 Million Uniques

Ars Technica reports that 142 million unique users watched video online in May, which counts for 74% of the total Internet users in the US, meaning 3 out of 4 people have watched some kind of video online.

Redlasso is a website which offers bloggers and site administrators the chance to embed video clips from TV shows, news programmes and sports events minutes or hours after they air on network television.

The site is currently in beta, and only open to about 18,000 users, but that hasn’t stopped the shit hitting the fan as the company today received a cease and desist letter from NBC, CBS and Fox over the copyrighted clips it is offering.

The letter, leaked by Silicon Alley Insider, claims that Redlasso has broken state and federal laws while causing the companies “serious and irreparable harm.” The companies are demanding an immediate ceasing of all the copyright infringements.

When Hulu was launched as a joint venture between NBC and Fox last October, YouTube suddenly became their enemy – NBC even deleted it’s YouTube channel and all of the content.

However, it seems there is now an official Hulu channel on YouTube. It was started on March 3rd, but has only now been noticed by The LA Times.

March 3rd places the channel’s launch date just prior to Hulu launching publicly, after it’s trial beta version. So what is a Hulu channel doing on one of, if not the biggest rival it has?

There has been widespread anticipation and rumours of a deal being concocted by Apple and Fox ahead of Macworld Expo ‘08. 

Now the details have been revealed by the big media.

The Financial Times reported (in its trademark salmon-colored pages) that Apple and 20th Century Fox, a entity held by Rupert Murdoch’s News Corp, inked a deal that would grant iTunes users the option to rent films produced by the studio.

The news of the impending partnership comes in anticipation of the consumer-centric conference to be held at Moscone West in San Francisco, California.

NBC Direct launched its public beta yesterday, and the blogosphere was immediately awash with thoughts on the service and reviews of what it is offering.

Most of these, or at least the ones I have read, were on the negative side, mainly because NBC have seen fit to build so many prohibitions and limitations in, that NBC Direct becomes a pointless exercise.

Only For Americans

To use the NBC Direct service, you first need to be in the US, which I’m not, so that rules me out straight away. Like Hulu and The Daily Show Archives before it, licensing and rights management mean only people currently resident in America can access the videos on offer.

I know licensing is important, but that doesn’t make me, as a Brit, sitting here wanting to watch episodes of Heroes, and The Office, feel any better about being effectively banned from access.

Although it makes sense from a short term business aspect, surely companies such as Fox and NBC realise that for internet television and video on demand to continue growing, the world needs to be in on it, not just one country.

That’s surely the whole point of the web, to be a global community, with no borders or barriers placed on it.

comScore, one of the world’s leading digital entertainment surveyors, has revealed its latest Video Metrix report for May 2007, which showed that nearly 75% of all Americans watch video online during said month.

Not surprisingly, YouTube, the undisputed king of video content on the web, topped the list of places to watch, with 35 percent of users tuning in to 1.8 billion streams during the four-week period. Fox Interactive Media ranked second with 8.1 percent (680 million streams), while Yahoo! Sites earned bronze with a 4.6 percent share and 387 million streams.