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Hulu on track to generate $240 million in revenue this year

November 10, 2010 |  1:23 pm

Looking to gin up excitement among potential investors and encourage new advertisers, online video website Hulu on Wednesday touted its improved financial picture and positioned itself as a superior platform for TV commercials.

Hulu should make more than $240 million in revenue in 2010, a dramatic surge from the $108 million it collected in advertising revenue last year, Hulu Chief Executive Jason Kilar said during a keynote address at a technology conference in San Francisco. 

KilarJasonEarlier this year Hulu said it was profitable but hasn't given details. And on Wednesday, Kilar didn't offer projections for avertising revenue in 2011 and beyond, which is what investors really want to know.

The 3-year-old service -- which counts among its owners the entertainment giants NBC Universal, News Corp. and Walt Disney Co. -- is looking for ways to grow. It's weighing several options, including a public stock offering.  It could also lure new private investors, giving it resources to fund the expansion of its subscription service, Hulu Plus, to portable devices such as Apple Inc.'s iPad, as well as game consoles.  Bringing in new partners could also provide the company with money to buy out the stake owned by Providence Equity Partners, which invested $100 million in 2007 to launch the site.

However, at Wednesday’s conference, Kilar seemed most interested in underscoring the power of Hulu's key revenue stream: advertising.  Hulu expects to continue to generate most of its revenue through commercials even though it is launching a subscription service.

Kilar noted that 352 advertisers pitched their products and services on Hulu during the last three months –- delivering 800 million streams in October alone.  He also cited industry research that users had a higher recall of the ads they watched on Hulu than on traditional television.

Hulu is one of the most prominent players in the nascent online video advertising market.  Research firm eMarketer estimated that the overall market should grow 48% this year to $1.5 billion.  And within four years, eMarketer predicts, video advertising will be the third most popular form of Internet advertising, behind only search and banner ads.

-- Meg James and Dawn C. Chmielewski

Photo of Jason Kilar by Gary Friedman, Los Angeles Times