A few announcements in this video to the press...
Read the article here, thanks to Philippe Guerrier for the chat.
By the way, Comscore had released new numbers for the US the previous day, and I had had no time to review them. So here are some interesting updated data for OCTOBER 2008:
- "U.S. Internet users viewed 13.5 billion online videos during the month, representing an increase of 45 percent versus year ago." > that' an 18,5% increase over the previous number we had for July, 3 months ago, at 11,5b
- "In October, Google Sites once again ranked as the top U.S. video property with nearly 5.4 billion videos viewed (representing a 40 percent share of all videos viewed), with YouTube.com accounting for more than 98 percent of all videos viewed at the property." > that's almost 5,3b videos viewed for Youtube in the USA (% of the rest of the word ???)
- "Hulu, a joint venture of NBC and Fox featuring full-length broadcast TV programs, ranked sixth with 235 million videos viewed (1.7 percent)" > that's about 4,5% of the traffic of Youtube (again, US numbers for both)
- "More than 147 million U.S. Internet users watched an average of 92 videos per viewer in October." > this number is going up, about 5m more in 3 months, getting the reach in the USA from 75% to 77%. The number of videos viewed is differnet per site, Youtube only captures about 53 videos per person, whereas hulu.com gets about 10 a month.
- "More than 80 percent of the 18-34 year olds watched online video, higher than any other age segment. The average 18-34 year old online video viewer watched 4.8 hours of video during the month, also ranking above all other age segments." > this is great, because this is the age segment many advertisers want to target them, they are prescribers, have disposable income, more internet savvy...
- BUT THE MORE INTERESTING FACTOR IS HERE : hulu.com has a reach now in the USA of 24m, vs Youtube of a reach of 100m. 24%... Average video length (no number for youtube specifically, anyone has it ?), is 3 min. average length on hulu is 12 min. So youtube streams 3min x 99,5m people x 53,2 videos / 60 = 265m hours / month. Hulu streams 9,8min x 24m people x 9,8 videos / 60 = 45,5m hours/ month. That's 17% of Youtube. Now in previous reports, Youtube only monetizes 4-6% of its inventory. Let's say 5%. Hulu 100%. hence Hulu can monetize 45,5m hours. Youtube can monetize 5%*265 = 13m hours... That's 3x less than Hulu for a site that has 4,5% of its traffic... Latest numbers I've read (maybe totally wrong) is that youtube is doing $100m this year, and hulu.com reports doing $70m... not bad.
- If my maths are not wrong, monetizing 5% and 100% respectively, at $70m and $100m revenue respectively, traffic at 245m and 5,2b video views respectively, and assuming 100% of the inventory is monetized with CPMs, hulu.com is reaching almost a $300 CPM while youtube is reaching a $1 CPM... doh.
- To be fair, if you look at costs, hulu.com should have only 17% of costs of youtube in terms of streamed hours. Actually that's true for bandwidth, CDNs, probably not really for servers, they must have a large installed base also to handle the load. All in all, assuming a random scaling factor, let's say hulu.com has costs that are x2 or x3 more than youtube (the google effect behind). Hence 34% to 51% of youtube's costs. With 70% of revenues of youtube, I think I like hulu's model so much more ! including the UI of course.
- Finally, there's a hiccup in this discussion. Although youtube is doing rev-share with some of its content publishers, hulu probably has to do rev-share with rights-holders as well. And in the movie business (including TV series), there's a thing called MINIMUM GUARANTEES, that you pay usually upfront to get the right to broadcast a catalogue. This happens so that there's a minimum income for the studio, that it justifies fixed costs, etc. In addition, MGs tend to be charged by territory, hence even more expensive if you want a global footprint for your service (hulu is only in the USA for the moment, so get a VPN ;). This challenges clearly the COGS structure of a hulu.com, and as a matter of fact any new entrant who'd like to compete with hulu. They'd face the same issues.
Final thoughts :
- there's a B-model for online video properties that can monetize 100% or nearly 100% of their inventory
- acquiring rights to content is a challenge if MG are involved. The industry has to move to a pure OPEX model, but this challenges somehow the media channels release chronology. (more on this another day)
- great quality (content encoding quality, content type, user interface), command for longer viewing experience
- longer viewing experience allow for new video ad formats (overlays, mid-rolls), hence increased revenue streams.
Anyone else has more numbers ? different thoughts ?
