NEW YORK (AdAge.com) -- When NBC Universal and News Corp. created Hulu, they gave the video portal a valuable but short-term asset: exclusive rights to distribute NBC and Fox shows outside of the media giants' own websites.
From that base of content, Hulu.com has become the fourth-biggest online video distributor by unique visitors in January, behind YouTube, Yahoo and MySpace, according to the latest from Nielsen VideoCensus. In total video streams, it's No. 3, with 232 million, behind YouTube (5.8 billion) and Yahoo (277 million).
But the exclusive part of that NBC-News Corp. deal lasts only two years, and Hulu knows all too well that the scarcity that helped it establish an audience (and brand) is going away soon. Hulu has never said exactly when the deal expires, but it's likely within a year after the first anniversary of Hulu's public launch, in March.
So, in the coming year, Hulu will be focused on figuring out a calling card besides exclusive "Saturday Night Live" clips and "Family Guy" episodes. Since NBC Universal and News Corp. are partners in the joint venture, they'll still have an interest in seeing Hulu succeed, but if they distribute their content wider, Hulu will have to differentiate on quality, including features such as search, chat, community functions, and the ability to search for and discover content, among other conveniences.
Hulu has a huge head start -- and even has a Super Bowl ad under its belt -- but it's about to get a lot more competition from portals such as Yahoo TV, which was the fastest-growing video site in January, but also from TV-centric sites such as, well, TV.com, which CBS acquired in the CNet deal last summer.
Since its relaunch last month, TV.com is growing fast. It's the bigger site in terms of unique visitors, with 5.9 million compared with Hulu's 4.5 million, according to Nielsen. And TV.com's revamp has reversed a downward traffic trend, according to Compete.
In the more-important video-views metric, however, TV.com is still a non-player, at No. 33 in unique video views, according to Nielsen, with about a quarter-million in January, compared with Hulu's 7.2 million.
TV.com's challenge is to grow the number of videos served on its site. Why? It's the difference between a $5 to $10 CPM (the cost an advertiser pays to reach a thousand viewers) for a display ad, such as the kind shown to someone visiting TV.com for its TV listings and editorial content, and a $25 to $35 CPM for a 15-second video ad within a TV show, such as those on Hulu. Visitors are visitors, but they're more valuable when they're watching video.
Right now TV.com is distributing Hulu, and getting 10% of ad revenue from views that originate on its site, but TV.com could just as soon do its own content deals, even with NBC and Fox once Hulu's exclusivity ends. It didn't take long for Hulu to build an audience, and a brand, but going forward, the question is whether it can defend what it has built.