Rival forecast to catch YouTube
By Tim Bradshaw in London and Matthew Garrahan in Los Angeles — YouTube is in danger of being upstaged commercially by a smaller upstart backed by News Corporation and NBC Universal as the video-sharing site struggles to make its massive global audience appeal to advertisers.
Context & Ripple Effects
The challenge follows the 2007 decision by News Corporation and NBC Universal to join forces against YouTube. Earlier coverage had already framed YouTube's reach as difficult to translate into a durable business, including its struggle despite market dominance.
Hulu gives those media backers a commercial yardstick against YouTube: advertiser appeal, rather than audience size alone, is becoming the point of competition.
First-order effects
- YouTube faces sharper pressure to turn its global audience into advertising demand as Hulu is forecast to match it commercially.
- News Corporation and NBC Universal gain validation for their joint Hulu challenge if advertisers value its offering more highly than YouTube's larger reach.
Second-order effects
- Advertisers gain a more credible alternative for online-video spending, forcing YouTube to compete more directly on commercial effectiveness rather than scale alone.
Third-order effects
- The contest points to an online-video market in which media-company alliances can challenge a larger platform by concentrating on monetization, not simply audience growth.
The trend: Online video is shifting from a race for viewers toward a race to convert viewers into advertiser value.