Double Telco Trouble: Hulu Launches, Cable’s Ad Campaign

The much-anticipated Web video venture Hulu, which enables users to download full-length streaming TV shows and movies, launches today.

Coincidentally, this is being announced on the same day that search engine kingping Google Inc. closes its $3.1 billion acquisition of DoubleClick Inc., which when combined with its YouTube unit, presents a serious rival for Hulu.

Meanwhile, while top cablecos are teaming to provide advertisers nationwide, and targeted, consumer reach.

However, telcos appeared to be focused on service deployment and feature additions around video services and less able to advance efforts around advertising related to IPTV and video streaming at this time, which could put them at a disadvantage in this realm down the line.

Hulu is the News Corp., NBC Universal venture that provides more than 200 TV series episodes, about 100 movies - and clips of each - from 20 content owners. It offers two options for potential advertisers - a mandatory 2.5-minute movie trailer preceding free viewing or the ability to choose between multiple ads.

Announced nearly a year ago, Hulu.com has been in private beta since last fall and closed a $100 million round of private financing. The venture has since signed distribution partnerships with Comcast Corp.’s Fancast.com, MSN, Yahoo!, AOL, and MySpace, but not with any telco-owned Web destinations.

The company said 5 million viewers have watched Hulu videos in the last 30 days through Hulu.com or its distribution partner Web sites. More than 50,000 Hulu players have been embedded on 6,000 Web sites. Its current advertisers include Best Buy, Chili’s, DIRECTV Inc., General Motors Corp., Intel Corp., Nissan North America Inc. and Wal-Mart Stores Inc.

In a further showering of new options to potential advertisers, the nation’s top cable companies are forging ahead with Project Canoe, under which they’ll offer companies reach beyond their respective regional footprints and stronger ad targeting options.

Both initiatives directly address the need for new and broader ad models voiced by the membership of the National Association of Broadcasters (NAB) nearly a year ago and by cablecos and their customers at the National Cable & Telecommunications Association’s (NCTA) Cable Show last May.

With Nielsen Media Research claiming that streaming TV show and movie viewing is climbing substantially, and cablecos are forging tighter links with content owners and broadcasters, telco TV companies are behind the eight ball in supplementing subscription revenues with ad dollars.

In separate but related news, networking infrastructure giant Cisco Systems Inc. has invested an unspecified sum in streaming technology upstart GridNetworks Inc., whose solution could help monetize video on the Internet.

It seems almost everyone but telcos are committing megabucks and gigantic resources to figuring out how to make money on the web.

Only time will tell if video sharing Websites copy Hulu.com ad models or adapt them for use on their locations, as many rely primarily or entirely on syndicating their focused content to more well-traveled Internet destinations.

But beyond big pipes to sites like Hulu, what opportunities exist for telcos? Large scale streaming, such as CBSSports.com’s annual March Madness milestone, heavily helps content delivery network operators such as Akamai Technologies, Inc. – and telcos like AT&T Inc. and Level 3 Communications Inc. that own CDNs.

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