YouTube's Hulu Revamp

Over the last year, the television and movie Web site Hulu has grown from a clever idea to YouTube's greatest rival, netting tens of millions of dollars in ad revenue in a matter of months. YouTube, meanwhile, has struggled to figure out how to attract advertisers spooked by the amateur video clips and format that buries more professional (and ad-supported) films beneath a cacophony of submissions. Now, YouTube has reportedly figured out how to respond: steal Hulu's best ideas.

According to the digital-advertising news site Clickz, YouTube will roll out a complete redesign next month, one that will highlight professional movies and TV shows with commercials and sponsors. Currently, the site is organized into mystifying categories such as "videos," "channels," and "community," which do almost nothing to help viewers find Star Trek episodes or other fare that actually makes YouTube money. Now, the site will separate the professional content from the amateur clips. "Movies," "music," and "shows" will bring you to ad-supported entertainment of various stripes, while "videos" will steer the user to the old user-generated content that got YouTube started but has yet to make serious bank. "It's totally a Hulu approach, but that's best practices right now," an ad executive who has seen the new format told Clickz. The rollout is reportedly scheduled for the middle of next month.

In addition, Disney may be on the verge of signing a new YouTube distribution deal to showcase shows from ABC, ESPN, and other outlets on the site. PaidContent.org reports that under this arrangement, Disney and Google would share ad revenue, with Disney mostly controlling which ads will be shown alongside its content. This would considerably expand YouTube's portfolio of professional content, but here's where it gets a little confusing. According to PaidContent, the YouTube clips would be explicitly shown on YouTube, which means Hulu would be locked out. But here's where it gets really confusing. The Los Angeles Times reports that Disney is negotiating with NBC and Fox for an equity stake in Hulu! If the company takes a piece of Hulu, it would seemingly make no sense to sign an exclusive content-sharing deal with YouTube. Unless Disney is playing both sides of the field, lining up some content to air on Hulu and some on YouTube in order to assess which site pays off the most. If so, that's an awfully expensive experiment.

Whatever the big boys work out among themselves, YouTube users and advertisers will clearly be the winners if the YouTube revamp goes through. Gone will be the days of searching for old Twilight Zone episodes amid the mashups and O'Reilly meltdown dance videos. Suddenly, advertisers will find their audience. And YouTube just might start making more serious bank, as soon as this recession thing plays out.