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Comment by modeless | Hacker News Reader

The "premium" content is really the content they had at the beginning, but lost over time as the rights holders cracked down; e.g. movies you'd actually want to watch, and more than 5 back episodes of currently-running shows.

What we have here really is a failure of the advertising model Hulu uses. They just can't make enough money per viewer to displace traditional broadcasting or DVD sales. IMHO either Hulu or the advertisers are doing something stupid, because there really should be a gold mine there. The targeting and scheduling flexibility that's possible on a site like Hulu should make it more valuable per viewer than TV.

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Online advertising doesn't compete against traditional broadcast advertising on a level playing field. You can directly measure a lot of the effectiveness of an online ad. That's much harder to do with traditional ads, so everyone uses statistical models for pricing. Except those models are probably mostly garbage.

Likely online advertising meets or exceeds the actual performance of traditional ads, but people have yet to admit out loud that the emperor has no clothes. That's only a matter of time though, and the result won't be any different than the current reality: to maintain the production levels people are used to, business models are going to have to change, whether it's subscriptions like Hulu is going for, or something else entirely.

I don't think it's a failure as much as it's a case of the market not being ready yet.

Hulu, last I checked, reports about 370 million streams a month which lines up with Compete.com's numbers which puts them at about 7 million viewers per month (around 12 streams average per user per week).

That number puts their entire audience lower than most single TV shows (CBS manages to get at least 8 million viewers on Friday night at 10pm which is the worst time slot in existance for broadcast TV). Couple that with the fact that Online TV shows only being able to support a few commercials per show and you have a very tough market.

But as Online video reaches critical mass and the audience grows I think you'll start to see a more sustainable ad based revenue model

TV and newspapers used to have an advertising monopoly. Possibly the competitive pressure outweighs the better targetting?

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