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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Hulu is a brilliant service which has truly brought American television to the online masses. Part of the appeal of Hulu is the fact it’s free, with revenue coming from a purely advertising-based model. But certain parties want to change all that. Could Hulu survive the transition to a subscription-based model?

Hulu – Hot and Getting Hotter

Being British, I’m jealous of Americans for one reason and one reason alone – Hulu. Yes, we get to watch BBC programming on the iPlayer, and there are a number of other online TV catch-up services either already present or about to launch in the U.K. But Hulu offers American television at its best.

Hulu is massively popular in the States, having around 40 million viewers at the last count, who between them watched nigh on 500 million video streams. Which is surely cause for celebration amongst the partners behind the project.

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Money is key. It’s a shame that is the case but true nevertheless. And this adage is having a direct influence on the online video sector – from why YouTube is constantly engaged in battle with copyright holders to why Hulu no longer supports Boxee.

Money Is Everything?

It’s a sad fact of life that money is of the utmost importance in almost everything we do. Being in relationships, having kids, and enjoying life are all directly influenced by money. And of course, jobs and the art of business thrive or otherwise on how much money is generated.

Almost every decision taken can be influenced by money, how much you have, how much you want, how much it’ll cost, how much it’ll make. Television is no exception. Whether a show gets canceled or recommissioned comes down to how many people are watching, and consequently, how much revenue it is drawing in.

Online Video Revenue

Therefore, it stands to reason that online video, particularly that supplied by traditional media and television companies is also dependent on the same market forces. Unfortunately, so far at least, online video is failing to pay its way.

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Until now, Hulu and TV.com have existed side by side happily, with the latter even syndicating content provided by the former. But that relationship now seems to have soured. Could Hulu now be eying TV.com up as potential competition?

Hulu Vs. TV.com

Hulu, the joint venture between NBC and News Corporation, has had an incredible run of success since launch. It has grown substantially, and gone from having zero traffic to 75 million visits a month. Hulu viewers tend to be loyal and very happy with the service.

TV.com, one of the most sought-after domain names in the world, used to be an information source with added community features such as forums. You’d basically use it for finding out about the latest episode of your favorite TV show.

But after being part of the CBS acquisition of CNet last year, TV.com has evolved into something much more. As well as the old features having remained, the site has been turned into a portal for online video, with episodic content abounding.

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2008 has now seamlessly morphed into 2009 and we’re all a year older, and maybe even a year wiser. But what happened in the world of Internet television over the past 12 months?

Here are my highlights of 2008 in the world of Web TV, with the two or three most fascinating or biggest stories from each month of the year. I wonder if 2009 will hold equal delights?

January

The year began with speculation as to whether Joost would survive the year. And despite a dodgy economy and bumps along the way, it has managed it. Meanwhile, there was an intriguing story concerning how BitTorrent wasn’t being used just by pirates to swap illegal wares.

February

Blu-ray finally won the battle of the high-definition formats but would it really matter in the end when digital downloads were surely the future? Quarterlife made its NBC TV debut and unfortunately didn’t do very well, proving Web video still has a way to go before mainstream acceptance is guaranteed.

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The Beijing 2008 Olympic Games have now come to an end, with a spectacular closing ceremony ending the Chinese Games and handing the torch on to London 2012. But did the online coverage of the Games live up to the hype?

Certainly the Web portion of NBC’s offerings didn’t make as much money for the company as it would have liked. But whose fault was that?

$5.75 Million Revenue?

According to The Wall Street Journal, research firm eMarketer Inc estimates that NBCOlympics.com will have generated only about $5.75 million in video advertising revenue for the American television network.

We’ve spoken about video advertising and the difficulty in monetizing Web video a lot here on Web TV Wire, and that difficulty has seemed to rear its ugly head yet again for the Olympics.

NBC paid almost $1 billion to have the exclusive rights for television and video coverage of the Beijing 2008 Olympic Games in the U.S. But it seems that it is still losing the battle for viewers with Yahoo.

NBC spent the run-up to the Olympics in China talking up its extensive coverage of the Games.

And with over 2,200 hours of footage being made available online, it certainly had a right to brag.

Technical Issues Galore

Unfortunately, there have been technical limitations and issues surrounding the online coverage. This means viewers not only need to have Vista to watch any footage, but also have no firewall installed on their PC.

Broadcast delays to stop any loss of viewers and advertising from traditional TV have also affected Web viewer numbers, with many finding alternative (and often illegal) methods of watching their favourite event.

Even when viewers do get the chance to watch coverage of the Games on NBC’s site, they are often faced with footage without any kind of commentary, poor quality video, or even an event location but no action taking place.