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Rise of Hulu and Decline of Network TV Ads

More than 167 million U.S. Internet users watched online video during the month of October 2009, according to a market study by comScore. Online video viewing continued to reach record levels in October -- with nearly 28 billion videos viewed during the month.

Google websites continued to rank as the top U.S. video property in October as it delivered 10.5 billion videos viewed. YouTube.com accounted for nearly 99 percent of all videos viewed at the Google properties.

Hulu ranked second with 856 million videos viewed (3.1 percent) followed by Microsoft websites with 451 million (1.6 percent) and Fox Interactive Media with 446 million (1.6 percent).

More than 167 million viewers watched an average of 160+ videos per viewer during the month of October. Google websites attracted 126 million unique viewers during the month (83.5 videos per viewer), followed by Fox Interactive Media with more than 53 million viewers (8.4 videos per viewer) and Yahoo! websites with 50 million viewers (6.8 videos per viewer).

The average Hulu viewer watched 20.1 videos during the month, representing another all-time high for the property.

In October, Tremor Media ranked as the #1 video ad network with a potential reach of 75 million viewers, or 45.0 percent of the total viewing audience. YuMe Video Network ranked second with a potential reach of 68 million viewers (40.4 percent penetration) followed by Broadband Enterprises (BBE) with 67 million viewers (40.0 percent).

Clearly, Hulu's success contributes to the cannibalization of TV network advertising revenue. The trend from linear TV program viewing to on-demand video viewing is already solidified -- in both advertisers and consumers minds.

Even if Hulu were to shift to a pay-per-view or subscription model tomorrow, this would not alter the behavior pattern that's been established.

Some of those who refuse to pay Hulu will merely watch readily available video content on one of the multitude of other advertiser-supported websites. Others will simply download the blocked TV show videos, once again, from the P2P Darknet. Industry analysts describe what appears to be a no-win situation for the big-media companies.

Other findings from the comScore study include:

- 84.4 percent of the total U.S. Internet audience viewed online video.

- The average online video viewer watched 10.8 hours of video.

- 125.3 million viewers watched nearly 10.4 billion videos on YouTube.com (83.1 videos per viewer).

- 41.1 million viewers watched 313.5 million videos on MySpace.com (7.6 videos per viewer).

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