Online Video Business Models: YouTube vs. Hulu

The origins and development of two of the most successful online video services in the United States: YouTube and Hulu, are examined in this paper. In looking into both these business stories, the case study analyzes the different commercial models implemented by the companies in question, the results in terms of web traffic and revenue, and the strategic outlook for both firms. YouTube develops a model that offers free videos on a global scale, but with local idiosyncrasies in the most important markets. It offers a large quantity of videos; however, in general, they are short in duration and poor in quality. In most cases, the videos are submitted and produced by the users themselves. This has the potential for creating technological problems (video streaming capacity will have to be high performance), legal difficulties (possible violations involving protected or inappropriate content) and commercial problems (reluctance among advertisers to insert ads in low-quality videos). Hulu concentrates on offering professional content free of charge and only on a national scale in the United States. The quantity of videos is much smaller; however, they generally are of longer duration and better quality. The videos are made available by the channels and the production companies that hold the rights to them. Consequently, Hulu faces fewer problems of a technological, legal and commercial nature, but its brand is not as well known, nor does it have the summoning power of YouTube.