Hulu and Demand Media both filed for an IPO. Demand files a week ago, Hulu today. Both companies are content plays. However, the similarities end there.
The real question is: which is the better investment?
Hulu aggregates super premium and premium videos (disclosure: WatchMojo is a big provider of content to Hulu with multiple channels). But it doesn’t produce any content itself.
Demand Media is labeled a content farm (at best) and accused of many things, including killing journalism, though in all fairness, it does not produce any journalism whatsoever and focuses on what their CEO Richard Rosenblatt calls “service journalism” (how to’s, tips, etc). The company is focused on articles but moving increasingly into video production; in fact, its first video offerings included user-generated content it got after acquiring Expert Village. It has set up Demand Studios to ramp up video production.
When everything is said and done, I like Demand Media, I think it’s wise that they care so much about what people actually read and how valuable that is to advertisers. I won’t lie: I am curious and interested to see if the so-called content farm approach can successfully be applied to video content creation (my experience says it will be hard and result in an inconsistent product).
But the point remains, despite the fact that Demand Media operates in UGC/prosumer and premium content (instead of Hulu who only touches super premium and premium content), I wonder: does the fact that Demand Media owns content make it a better investment?
Frankly, neither company is profitable:
But despite its status as a big player in online video, Hulu currently makes little in the way of profit. In May, it reported taking in more than $100 million in revenue last year, though it added that it was on track to make that amount again by the middle of this year.
Hulu is direct about that. Demand Media got roasted by the press last week. Any way you dice it: it was a rough week for Demand Media after announcing their plans for an IPO.
All to say, if you follow digital media, content and/or video, this will be a very interesting storyline to see how each one fares.
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