YouTube, Hulu vie for premium Disney content

When it comes to showing TV clips, sports highlights and other short-form video content, Disney's decided YouTube is the way to go, and it signed a deal this week to do just that. But the question is far more murky when it comes to full-length episodes and other long-form content. Can YouTube shed its low-brow anything-goes image and entice the likes of Disney, ABC and ESPN to run full-length episodes of its premium content on its site?

PaidContent reports that Disney Media Networks (which owns Disney, ABC and ESPN) has agreed to run short-form content on special U.S.-only YouTube channels. Previews for ESPN and ABC content are up now, the ESPN channel will launch in mid-April and the ABC channel will come online in May. But Disney is also looking for a third-party online avenue for its long-form, full-episode content, and in that arena, YouTube has some formidable competition in Hulu.com.

Hulu has the upperhand when it comes to full-length content because it was designed from the ground up just for that purpose. Jointly owned by NBC Universal and News Corp., it tends toward a more TV-like, cleaner environment vs. YouTube's free-for-all user-posted content. PaidContent's Staci Kramer quotes one executive as saying:

It’s the difference between putting Grey’s Anatomy next to House, or next to “weird things” or having shows disappear amid a vast amount of video.

The downside to Hulu right now is its far smaller audience size. YouTube accounted for 41% of all U.S. video streamed in February, according to comScore Media Metrix, while Hulu accounted for just 2.5%. That's a huge difference. Still, it can be argued that Hulu's audience is more discerning and easily targeted by advertisers, since it is looking solely for premium content--and not, say, tips for giving your cats weird ears.

Disney could also make out in the Hulu deal when it comes to ownership of the site. According to PaidContent's sources, NBC Universal and News Corp. expect to become equal partners with Disney, should the Hulu deal pan out, meaning each firm gets a 30% share of the site. The way Paidcontent sees it, Disney needs to decide between a short-term bird-in-the-hand type deal via YouTube's larger audience reach vs. a longer term investment with a potentially larger payout down the road from an ownership stake in Hulu.

Right now, the momentum is definitely on YouTube's side. It's got Disney on board for short-form content and it has the overwhelming edge in audience numbers. But as Google well knows, targeted audiences are far more lucrative when it comes to advertising dollars. And YouTube's audience is everything but targeted.

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