Is Hulu’s "Evil Plot to Take Over the World" Working?

I’ve never paid for cable. It’s not that I don’t enjoy TV. I do enjoy it, perhaps a little too much, which is why I’ve always thought it better to steer clear of cable and satellite services. For a while I led a happy existence — reading books, frolicking in the sunshine, and maintaining a marginal degree of intelligence. Then Hulu came along with its "evil plot to destroy the world" and things changed. Hulu offers free TV shows and movies from a multitude of networks and studios with crisp pictures and minimal advertising. These days I spend much more time watching online video than I should.

Apparently, I’m not the only one who enjoys Hulu’s free services. Hulu may be becoming more of a brand online than ABC, NBC and Fox, the big broadcast networks that own shares of it.

As shown in the chart below, traffic to hulu.com overtook all three networks for the first time in June. The networks’ traffic declined during the summer rerun season, but Hulu seems relatively unaffected.

So how has Hulu managed to draw people away from the networks that produce the content and supposedly hold the loyalty of consumers? To find out, I took a look at compete.com’s Search Analytics reports.

The chart below shows the percent of overall search traffic driven by term categories:

  • The network name category includes any term that has the name of the network in it (i.e. "nbc tv" or "hulu video")
  • The show name category is any search term that refers to the name of a show (i.e. "family guy episodes")
  • The free content category refers to any search term that contains the word "˜free’ (i.e "watch free tv")

The data point to one big reason for Hulu’s success: branding.

  • Hulu has been more successful in developing its brand with online video. Over half (56%) of Hulu’s search traffic in June was driven by branded searches for Hulu’s name, whereas only 17% of Fox’s traffic and 14% of NBC’s search traffic were driven by searches for the networks’ names.
  • The networks have been more successful in attracting viewers searching for specific shows with 43% and 34% of NBC and Fox’s search traffic, respectively, coming from terms relating to show names.
  • Hulu is attracting searches for free content while the networks are not. This suggests that Hulu has been more successful at marketing itself as a site for free TV, while the networks may be struggling to convey that they are also offering free access to their shows.

For the major networks, this means that it makes more sense to advertise specific shows than the network brand itself. For Hulu, the biggest takeaway is that is has successfully created a brand as a site for aggregated, free online content.

There have been rumors floating around that Hulu may start charging for content bundles. Some have argued that peer-to-peer file sharing still poses significant competition in the online content space and that too many outlets for free content already exist.

This my be true, but with Hulu’s successful branding, it may be able to make the transition to paid content simply by offering some added value and convenience — maybe portable content that the user could put on multiple devices to rival iTunes’ DRM. For now the question remains: will people who don’t pay for cable be willing to pay for online content?