Is Hulu Dying?

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Hulu is no longer in the top ten video sites based on data for November, according to online research firm comScore. It had been on the list for months. A rise in the number of people who go to Turner Digital helped push Hulu out of the ranking.

Hulu has had a number of problems recently, and weaker traffic to the site only puts these other problems into context. The premium video site began to offer a pay-based service. It appears to have faltered, perhaps because there is so much free content at other video sites. Hulu says it plans an IPO, but there is not much news about that anymore.

The market has begun to figure out that two sites with large amounts of video content are great threats to Hulu. Neither YouTube nor Facebook carry much premium video now, but each has begun a push into the market.

YouTube's size is extraordinary. comScore reports that the site had 146 million unique visitors in November. These visitors accounted for 5.2 billion viewing sessions. If YouTube converts even a relatively small percentage of its users to the premium services it has begun to offer, then it will eclipse any efforts by Hulu. Some analysts argue that YouTube cannot convert its users from amateur video viewing to feature-length content consumption, but there is evidence otherwise. YouTube viewers spent an average of 271 minutes on the site in November. That is a far higher figure than for any other site in the top ten.

Hulu has a similar competitor in Facebook. The social network had 42 million visitors in November, which accounted for 144 million viewing sessions.

Hulu's strategy has not worked. It was based on its ability to get premium content from networks and movie studios. Hulu's audience, it turns out, is probably not large enough to support a paid service. YouTube and Facebook have much larger user bases, so in their cases pay-based services may work.

Hulu management never thought that video sharing sites with their poor quality content and amateur contributors could compete with their premium video site. The sizes of Facebook and YouTube will probably prove that wrong. They are huge enough to push large numbers of visitors towards high-end video.

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Douglas A. McIntyre

Douglas McIntyre is editor of 24/7 Wall St.

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