AFI BLOG: Media and Technology

Silicon Alley Insider

Since Hulu launched three months ago, it has become a consumer success, joining Nielsen’s top-10 video sites, and serving more video in May than ABC.com.

What does that mean in terms of gross ad sales for the NBC U - News Corp. JV? Not much. And net revenue? Even less.

We estimate Hulu will sell between $45 million and $90 million of advertising during its first 12 months — April 2008 through March 2009. By the time it pays off its content partners, it will book between $12.5 million and $25 million in net revenue. (Which isn’t bad for a start-up, actually.)

How do we get there? Assuming Hulu grows a fairly conservative 10% month-to-month in its first year — it grew 20% from April to May, its first two full months of availability — Hulu will have served 1.8 billon TV and movie streams by next March. We’re assuming each stream results in at least one ad exposure, on average, but we’ll allow for the possibility each stream results in two . One exposure at $25 CPM, or cost per 1,000 impressions, is $45 million in ad sales; two exposures would double that to $90 million.

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