• For Hulu, Flat Viewership But Better Monetization During Past Year

    As prospective bidders for Hulu have assessed its value, two of the key things they have no doubt focused on are the site's viewership metrics and monetization. If comScore data for Hulu for the past year is a good proxy, then bidders have likely observed that Hulu's monthly viewership has stayed within a pretty tight range. Meanwhile, monetization has improved, but has also stayed pretty consistent since a step up in Q4 '10. Below are three charts I've created from comScore's data that illustrate these points.

    The first chart shows Hulu's unique viewers and viewing sessions from July '10 to July '11, during which time Hulu was either the 9th or 10th largest video site (note it fell out of the top 10 in August '10 and November '10, so those months of data aren't shown). Monthly unique viewers ranged from a high of nearly 30 million in September and October '10 to a low of 24.3 million in July '11 (and note that amount is down 15% from 28.5 million in July '10). Meanwhile, viewing sessions stayed in a range from 127 million in January '11 to 196 million in May '11. Viewing sessions increased a bit from July '10 to July '11. Seasonality surely plays a role in the month-to-month viewing pattern.

    As the next chart shows, Hulu viewers do seem to be spending more time on the site. Minutes/viewing session bumped up to over 200 last October, and have stayed above that mark since then, with just the exception of June '11. Once again though, the range appears pretty small, with a peak of 236.4 minutes/viewing session in January '11 vs. a low of 205.5 in July '11.

    The big news for Hulu over the past year is its monetization. As the chart below shows, Hulu increased its ad load in Q4 '10, as the number of ads served jumped from around 800 million/mo in Q3 '10 to 1 billion/mo in Q4 '10. Ads have stayed at around a billion/mo or more since, with the exception of July '11 when they dropped to 963 million. Ads per viewer increased to over 40 in Q4 11 and have basically remained there since.

    Interpreting the data, it seems that Hulu has a loyal base of viewers who don't seem to mind more ads. However, it also seems like a key challenge for Hulu is expanding the number of viewers, with a related challenge of increasing their intensity of usage beyond the current range. I've suggested in the past that given Hulu's current content choices it's likely that the site has saturated the audience interested in its content. It's also too soon to know what the impact of Fox's new 8 day authentication window is, but it will likely suppress viewership to some degree.

    All of this raises the questions of how bidders will value Hulu as it is today and how each would create new value for the site (e.g. add more content, strengthen promotion and distribution, etc.). Hulu has made solid progress since its launch, but any bidder must have strategies for moving its performance beyond the band it has been in over the past year.