Why Hulu Will Eat YouTube's Lunch

Saturday night, YouTube held its inaugural "YouTube Live" concert where a number of mainstream artists played and sang along with a few YouTube stars. Mogulus estimates that there were 700,000 concurrent viewers of the YouTube live stream. Sounds like a large number until you realize that most TV shows have millions of viewers.So why do I believe Hulu will eat YouTube's lunch? Easy, Hulu is where the ad dollars will go. If I look back to my days buying millions of dollars worth of media and you asked me which service I'd rather be associated with, the answer is easy... Hulu. The real question for brand marketers is where is the best likelihood for user engagement with my advertising. Viewers of Fred or Justine on YouTube aren't going to interact with online advertising the same way a mainstream Internet user will. In fact, I'd argue that most YouTube viewers aren't going to interact with any online advertising.

In fact, online video creators are going to have to work even harder to get brand ad dollars going forward. They are now competing with the biggest stars, movies, and television shows across all time. Buying ads on Hulu is easy and the viewers are there. There will be ad dollars for online video creators, they will just have to hustle for it more than was expected just a couple of years ago.

Charlie Anzman has a good post today on the second reason that Hulu will beat YouTube. He calls it the "real world" factor. Anzman notes, "I spend some (much more lately) of my time in the 'real world'. I occasionally miss a TV show that I enjoy and I can sit back with my wife anytime and watch that missed episode. It's really that simple. Hulu's easy and simple interface is great ... and we usually discover something else after." It's that "something else after" factor that keeps you hooked to Hulu way more than you will ever stay hooked to YouTube. Hulu also offers a never-ending selection of television programming and full-length movies.

The last reason I'd like to mention is that the viewing experience is so much stronger on Hulu than it is on YouTube. YouTube is fine for a quick three-minute cat video, but if you plan to watch a one-hour 24 episode or the full-length Taking of Pelham 1-2-3, you need a better viewing experience than YouTube offers.

YouTube had better get to work to remain relevant in a competition against the big stars. And just remember, Hulu hasn't even reached the mainstream yet. When it does, the numbers will be amazing.