Why HULU Is Winning The Online Video Race

(From Newsweek -- By Daniel Lyons)

As the worlds of technology and media collide, the same contest keeps getting played out over and over again -- lumbering old-media companies take on nimble new-media upstarts, and usually the new-media guys win, since it's easier for them to figure out the content business than it is for the content companies to figure out the techie stuff involved in launching an Internet business.

APPLE outfoxed the music companies and now in effect controls their business.

GOOGLE reaps billions by selling ads that run next to content created by others -- while some of those creators, newspapers and magazines, teeter on the edge of the tar pit.

In video, Google figured it could work the same trick again, so in late 2006 it spent $1.65 billion to acquire YOUTUBE, a site that had built a huge audience by dishing up user-generated videos and pirated clips from movies and TV shows.

YOUTUBE wasn't bringing in any money, but Google believed it would figure something out.

Meanwhile, Apple was trying to lure movie and TV studios into the iTunes store, just as it had done with music labels.

But this time the old-media guys fought back.

In 2007, a few months after Google bought YouTube, NBC UNIVERSAL and NEWS CORP. announced they would jointly build their own Internet video site.

Conventional wisdom among Silicon Valley pundits was that the site, called HULU (named after a Chinese word that means "holder of precious things"), would be an epic disaster -- or "Clown Company," as they dubbed it.

Old-media guys didn't "get" the Internet, detractors said, and partnerships between bitter rivals never work.

But guess what?

Unlike YouTube, Hulu had legal access to great content -- shows from NBC, FOX and others.

And it had great technology -- a clean, simple user interface and a smart search engine.

Today, just one year after its launch, Hulu has gained the upper hand.

Why Hulu Is Winning The Online Video Race

[Ahh, the "old" media strikes back. The moral of the story -- better content wins, again.]