Disney, ABC Join the Hulu Horde

Video streaming site Hulu has struck a deal with Disney (NYSE: DIS) to make the media conglomerate's programming, including shows from its ABC television network, available online through its channel.

In addition to taking a nearly 30 percent stake in Hulu, Disney will put full episodes of its ABC TV subsidiary's shows on the site.

That will give Hulu content from three of the top four U.S. television broadcasters, the other two being NBC and Fox parent News Corp. (Nasdaq: NWS), which cofounded the site.

CBS is the only major broadcaster not participating. Instead, it has ties with Google's (Nasdaq: GOOG) YouTube. CBS also streams its content to viewers for free through its own home site.

Disney's move is the latest in an escalating battle for the online video market, as television broadcasters scramble to find new sources of income and battle online pirates.

Details of the Deal

Disney will put its current and archived prime-time shows, as well as archived films, on Hulu.

These include full-length episodes of "Lost," "Grey's Anatomy," "Desperate Housewives," "Private Practice," "Ugly Betty," "Scrubs," "General Hospital," and "Who Wants To Be A Millionaire."

"Their joining Hulu is an indication that Hulu is becoming really important," Yankee Group analyst Josh Martin told the E-Commerce Times. "Disney's ABC subsidiary was one of the first sites to have high-definition streaming online."

Disney will have three seats on the Hulu board of directors.

What Is Hulu?

Hulu, founded jointly in March 2007 by NBC Universal and News Corp., is an independently managed video Web site where users can watch television shows, movies and short clips. Users can view programming on-demand, rewind, pause and fast-forward. The programs show advertisements, which cannot be skipped over, at select intervals.

Hulu has partnered with 35 sites, including AOL, MSN, MySpace and Yahoo. It gets content from nearly 150 companies, such as Fox, NBC, Comedy Central, Lionsgate, MGM, MTV Networks, National Geographic, Paramount, PBS, Sony Pictures Television and Warner Brothers Television Group.

Its status as a central hub of content from multiple sources makes it attractive to consumers. "If you're a consumer who wants to access content online, you don't want to go to 14 different Web sites to get it," Martin said.

This, in turn, draws advertisers to Hulu. "Content providers can expand the audience by one or two million by going online," Martin said. Advertisers count eyeballs -- the number of people viewing a site -- and click-throughs."

How About CBS?

CBS and YouTube go way back, having inked a strategic content and advertising partnership in October of 2006.

The broadcaster has remained circumspect about competition for the online video market and left the door open for a possible deal in the future.

"CBS has long employed open, nonexclusive content partnerships that allow fans across the Internet to engage with our programming in such a way that we control our distribution, sales and profit," CBS spokesperson Sarah Cain told the E-Commerce Times.

"We continue to discuss similar arrangements with additional partners as we grow our volume audience based on the strength of our content and the passion of the communities it creates."

Como Esta, YouTube?

Google has struggled to wring money from YouTube since it bought the video-sharing site in 2006. YouTube primarily hosts amateur, user-generated content rather than professionally produced shows, though the site has often attempted to stretch its horizons.

As far as exact numbers are concerned, though, Google does not break out figures for YouTube in its earnings reports.

"We don't go into profitability and unprofitability," YouTube spokesperson Chris Dale told the E-Commerce Times. "Everyone seems convinced as to what YouTube's bottom line and our losses or costs look like. I'm always surprised, because those are numbers that are based on conjecture."

Online Video Battles Heat Up

As slumping ad sales caused by the recession hit television broadcasters, they are turning to online video, heating up that market.

"This seems to be the next big frontier for revenue generation," Yankee Group's Martin said.

"Online programming gives broadcasters the ability to make content available that would otherwise not be available and generate revenue they otherwise wouldn't have -- or would have lost if people downloaded it illegally over the Internet," Martin explained.

"Many more" content partnerships like the one between Disney and Hulu should be on the horizon, he said.