GigaOM recently reported that it looks like Hulu is looking to open up internationally. And while I think this is a good move in general, in order to make sure this successful as a business strategy Hulu needs to be very careful which international markets they embrace. Since Hulu’s monetization strategy is based upon online advertising revenues, only those markets which will support the video distribution costs Hulu will incur make sense monitarily.
There is much to be said about taking on the UK market where online ad spending has certainly matured. The UK represents the strongest ad market in Europe and online ad spending is one of the largest segments in the UK market. So this would be an obvious place for Hulu to put a stake in the ground internationally.
That said, the majority of other international ad markets are immature particularly when it comes to online. And we can all remember the Friendster lesson that growth online is only truly significant when that growth can be monetized. We’ll have to wait to see how effectively Hulu manages its international growth.
A recent ANA/Forrester study reveals that marketers’ confidence in the effectiveness of television advertising is waning. Moreover, their interest in other ad formats is increasing and various online advertising opportunities look to be the beneficiaries of the shift. To quote, ” Eighty-seven percent of respondents said they intend to spend more on Web advertising this year.”
Much of this shift in marketing attention is related to growth of DVR usage in homes as well as the rise of VOD and rightly it should be. These technologies place the user firmly in control of their entertainment experiences. Traditional television advertising formats like the 30 or 60 second spot which treat the audience as prisoners of the medium simply do not have the power they once did. And while we don’t expect these formats to vanish altogether any time soon, it is reassuring to recognize that the marketing community realizes their diminished value.
All of this certainly bodes well for the growth of online video and new media in general. Growing interest in new advertising formats and opportunities by marketers including branded entertainment and advertising in online video is great news for new media pioneers. The dollars migrating in the form of marketing messages to various new media formats is just the kind of medium needed for sustained growth. I think this means the tide is finally turning.
More coverage over at NewTeeVee
Dan Rayburn notes that significant VC funding has flowed into the CDN market over the past 12 months. Much of this attention is almost certainly due to the explosion of web video and the it’s various providers. Sure, there are lots of other bandwidth hungry web applications like widgets, games, slideshows, etc. but nothing really clogs the pipes like video. And following Dan’s lead it certainly makes sense to expect consolidation in both of these markets. There are only so many users to go around and there is only so much content they can consume.
The good news is that there is still a lack of online video ad inventory so at least that part of the market isn’t saturated. At least not yet.