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Hulu's the One for Me

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So you think Twitter is the Next Big Thing? Think again. The truth is out there, and it's much simpler than that. Say hello to Hulu, the fastest-growing kid on the block. (What are they putting in the water, anyways?)

The story so far
In its 18-month lifespan, online video service Hulu has grown to bring nearly 8 million unique visitors per month to its site and streamed video to nearly 35 million users last month, according to market tracker ComScore and figures from TechCrunch. That means Hulu is nipping at the heels of Yahoo! (Nasdaq: YHOO  ) and its plethora of video-watching properties and coming up strong on News Corp.'s (NYSE: NWS  ) MySpace, but still lagging far behind Google's (Nasdaq: GOOG  ) market-crushing YouTube.

This puts Hulu only a few steps behind traffic magnet Facebook, which grew to about 14 million unique visitors per month in its first two years. Mighty Google scored only 5.7 million monthly users at the same age, though that happened way back in 2000, before the relative maturity of the Internet.

Twitter tussle
Twitter is undeniably hot right now, to the point where fellow Fools Tim Beyers and Rick Munarriz are coming close to virtual fisticuffs over the privately held company. Rick wants Google to buy Twitter ASAP, but Tim says "Hands off!" and hopes for a billion-dollar IPO someday. But the service is three years old, and has just now vaulted over the 8-million-users hurdle, according to researcher Compete. 

Weak. Right?

Well, not so fast. A year ago, Twitter had about 1 million unique users. Now, an astounding eight times that population is sending ultraquick text messages hither and thither for fun and profit. So Twitter has clearly entered those awkward teen years of high growth. (Virtual years are like dog years.)

Hulu still wins
But wait. Sorry for pulling you to and fro, dear reader, but Hulu is still the more impressive grower. Nearly 8 million users in February 2009 is 36 times the mere 220,000 curious visitors that researcher Compete pegged the company at in February 2008. If I could invest in one nonpublic Internet service today, I'd choose Hulu over Twitter every time. But I don't see my Foolish companions gathering around the water cooler to discuss the potential of Hulu as a public company. Why is that?

Maybe it's because Hulu already has a very clear ownership structure. Will General Electric's (NYSE: GE  ) NBC Universal and News Corp.'s Fox ever spin off Hulu into a separate company for us to invest in? I can't say for sure, but the video distribution service is on track to become more important than the media powers that launched it.

Don't let Hulu wither under that dual corporate umbrella like AOL withered under Time Warner (NYSE: TWX  ) .

In a couple of years we'll all need a central point to aggregate the heaps of digital entertainment options available to us. Hulu may stand a better chance of coming up aces as a separate operation rather than as a co-managed business with conflicts of interest behind the scenes. Although TiVo (Nasdaq: TIVO  ) or Netflix (Nasdaq: NFLX  ) might step in and steal the crown that now looks destined for Hulu's ample scalp.

One Fool's plea to the media mavens
Don't let this opportunity pass you by, Fox and NBC. Spin Hulu out, keep a substantial interest in the company, and profit hugely as Hulu continues to grow. And in the meantime, we humble individual investors would like a chance to come along for that rocket ride.

Don't hold onto this precious commodity too long or too tightly, guys. You could choke Hulu into irrelevance.

Further Foolishness:

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Google is a Motley Fool Rule Breakers selection. Netflix is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Google and Netflix, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.

Read/Post Comments (1) | Recommend This Article (9)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 24, 2009, at 2:12 AM, JayInJapan wrote:

    Hulu's a non-issue for me. They don't allow usage for those of us in Japan (and who knows how many other countries...) Twitter? No restrictions.

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