Hulu recently posted a blog article talking about the business of numbers, including subscribers, revenue, content, etc. Their revenue has topped \$1 billion they said, but no break down was done of where that revenue is coming from. However, with some simple math we can get an idea of where it all comes from. We can even drill down and get a pretty good estimate on how much it would be to place ads on Hulu content from a CPM, cost-per-thousand, viewpoint. Granted, it might not be true, or ideal, but it's an estimate.

In the Hulu blog post, they touted the fact that they've finally reached 5 million paying subscribers. From a GRP metric standpoint that means potential reach of Hulu Plus members is a meager 1.58% of the total U.S. population. Not all that impressive actually, the non-paying Hulu viewers total about 3.62% - more than double according to comScore who has them at 5.2% total. However, the company was quick to state that it has had quite a bit of growth considering that in 2011 they had only 1.5 million(ish) Hulu Plus accounts. From their own numbers we now know that 5 million people were willing to sign up for a Hulu Plus account. In Q4 2012 Hulu stated it had 3 million Hulu Plus accounts, which means a growth of 2 million subscribers in 2013.

## Some Hulu Plus Math

Breaking that out over 12 months gives monthly growth average of 166,667 accounts, or monthly revenue growth from Hulu Plus accounts of \$1.331,669.33 (if all pay regularly). Now crunch all that together and you get \$391,510,207.74 in Hulu Plus revenue for all of 2013 (hypothetically). I did it that way because if you were to just say, 5 million accounts all year at \$7.99 a month, the result would be \$479.4 million - roughly \$89 million in difference, a far less accurate number. There is plenty that could be wrong with my \$391.5M number as well if more account were created earlier in the year, it should be larger, later in the year, smaller. Accounts doesn't necessarily mean actively paying or ever paid, it could simply mean millions of people signed up but didn't pay a dime all year. But this is a number we can work with, after all, we're looking for an estimate of average CPM.

comScore monthly reports ad numbers for Hulu so I compiled those numbers for 2013. For the first eleven months of the year, Hulu showed 15,389,029,000 ads according to those numbers. In October and November it was about 1.4 billion ads, so we will use that for December for a grand total of 16.8 billion video ads for Hulu in 2013.

## Some Hulu Ad CPM Math

Alright a quick recap of the numbers:

• Hulu Estimated Revenue 2013: \$1B
• My Hulu Plus Estimated Revenue 2013: \$391.5M
• My Hulu Estimated Video Ad Views: 16.8 billion

So we do some simple math and subtract Hulu Plus revenue from Hulu revenue for the year (1.000 - .3915) and get the remainder which is \$608.5M. Now we take the number of video ad views on Hulu according to comScore (with my estimate for December) and divide it by the remaining revenue (16.8/.6085) and we get an average CPM of \$27.61.

## Math-tastic!

Hulu is, hypothetically, averaging around \$27.50 CPM for ad placements against its content.

That's quite impressive, because here are Nielsen Media Research numbers for primetime TV:

### Cost Per 1000 Homes

20105,248,000103,60019.74
20114,710,000106,50022.61
20124,630,000111,50024.08
20134,397,000110,20025.06

So, essentially, Hulu could be nabbing more per view right now than TV did in February of this year (when the table was put together), almost \$2.50 more per thousand views. Then again, there is some leeway in my math since it's all hypothetical. See final section of this article.

This table also brings to light another interesting fact, TV viewing is plummeting. In 1995, it was over 10.86 million, in 2013 it's just 4.4 million, over a 50% drop. This is primetime. Daytime numbers look like this.

ALSO ►  62% of 18-24 Year Olds Would Buy a Product Endorsed by a YouTube Creator
 2010 1,959,000 12,100 6.16 2011 1,626,000 11,800 7.26 2012 1,382,000 9,700 7.01 2013 1,382,000 9,200 6.69

Single digit CPMs which have been mostly stable since 2006. Meanwhile, primetime CPMs are up about \$3 since 2006, not taking into account the 2008 spike.

But wait, there's more!

Hulu also reported a pretty sizable increase in the number of advertisers which now tops 1,000 brands, a 15% increase over 2012. With 1000 brands, that means each brand, on average, spent \$6.085M with Hulu. Highly unlikely, when it's more like 10 brands spent \$30M each and the other 990 made up the difference. The top 10 probably look like Best Buy, Verizon, Capital One, some car company, some other wireless company. Honestly, I don't know, I read when the ads are on (as I've mentioned). But I do know that Alec Baldwin is rather funny in the Capital One ads and that Best Buy, or Microsoft, are massively pushing the Surface tablets right now (just binged on some Hulu last night).

## That's a (Year-end) Wrap!

Finally, I wanted to leave you with one dubious claim Hulu made in the same blog post.

Hulu remained #1 in engagement among top ad-supported online video sites, and #1 in market share of all premium online video providers...

Number one in market share of all premium online video providers it says. Yet, here are the numbers from comScore for November 2013, a chart which it did not make. Apparently, Hulu doesn't consider any of those companies premium video providers.

 Top U.S. Online Video Content Properties Ranked by Unique Video Viewers November 2013 Total U.S. – Home and Work Locations Content Videos Only (Ad Videos Not Included) Source: comScore Video Metrix Property Total Unique Viewers (000) Videos (000)* Minutes per Viewer Total Internet : Total Audience 189,178 47,148,046 1,177.3 Google Sites 163,504 14,737,686 387.9 AOL, Inc. 73,022 1,339,830 70.2 Facebook 66,194 1,233,234 28.1 NDN 51,039 576,699 78.0 Yahoo Sites 45,833 343,751 62.0 VEVO 43,696 649,705 47.8 Amazon Sites 42,204 182,511 19.6 Microsoft Sites 40,264 653,773 41.1 Vimeo 35,087 132,145 29.1 Turner Digital 30,616 248,230 39.2

Oddly, here's what the ad networks chart looks like, on which Hulu is in the bottom third.

 Top U.S. Online Video Ad Properties Ranked by Video Ads* Viewed November 2013 Total U.S. – Home and Work Locations Ad Videos Only (Content Videos Not Included) Source: comScore Video Metrix Property Video Ads (000) Total Ad Minutes (MM) Frequency (Ads per Viewer) % Reach Total U.S. Population Total Internet : Total Audience 26,757,722 10,234 154.6 55.8 AOL, Inc. (including Adap.tv) 3,999,297 1,815 24.7 52.2 Google Sites 3,643,330 365 31.7 37.0 LIVERAIL.COM† 3,054,165 1,287 19.0 51.8 BrightRoll Platform**† 2,683,286 1,268 15.9 54.4 SpotXchange Video Ad Marketplace† 2,377,879 804 18.9 40.7 Specific Media** 2,179,024 882 13.7 51.3 TubeMogul Video Ad Platform† 2,094,286 642 17.5 38.5 Hulu 1,419,197 572 88.7 5.2 Tremor Video** 1,133,362 526 10.8 33.7 Videology† 784,752 354 8.4 30.2

Hulu reaches just 5.2% of the U.S. population meaning, at most, 16.38 million unique viewers (~315m*.052) and its ad frequency is, if I may, GINORMOUS. Just something to think about for the self-proclaimed, "world’s most effective video advertising service," who is apparently focused on, "delivering industry-leading results for our advertising partners." Industry leading repetition maybe. Meanwhile, AOL is crushing it with 73M unique viewers and 4B video ads a month and Brightroll reaches the most people in the US with a ridiculously low frequency.

## Caveat Lector - Reader Beware

If there's a 10% margin of error, Hulu's ad CPM could be as low as \$24.75. On the other end of the spectrum, if there are really just 3 million paying Hulu Plus members, ad revenue could be as high as \$713M meaning the CPM is around \$42 and the other numbers would all have to be adjusted accordingly. Still, isn't hypothetical math fun?!