
Hulu Profitable? Please - jmorin007
http://www.alleyinsider.com/2008/11/hulu-profitable-please
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run4yourlives
_> Gross profit does not include the costs of selling advertising (10% of
sales), marketing, product development (Hulu's platform), or management or
administration salaries_

Sorry, what? Is this some new definition of profit being used here?

Let's stick to calling revenue revenue, and profit profit.

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aristus
That is the precise definition of gross profit: the revenue of one widget sale
minus the "materials and labor" cost of producing one widget. Gross profit
does not include fixed costs, backoffice costs, overhead, etc. You are
thinking maybe of "net profit".

The difference is basically that if you have gross profits, you can get to
'net net' profit just by growing your market share. If you are not gross
profitable, selling 10-cent apples for 8 cents, you are screwed no matter what
your other costs are.

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run4yourlives
And you've just described why I hate the definition.

 _> The difference is basically that if you have gross profits, you can get to
'net net' profit just by growing your market share._

How many more companies must flounder under this logic. I know it makes sense,
but in reality, "gross profit" is just a way of making a situation appear
better than it is.

Profit is the difference between all revenue and all costs. There are many
variables than can be adjusted on either side of the equation.

To throw out a few costs, and they recalculate your "profit margins" is like
calculating the inflation rate without using the cost of food and oil ~ fuzzy
accounting, designed only to obscure in order to prove a stated position.

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aristus
Well, not quite. Different measures of profit help you figure out which bits
to concentrate on, just like having a good profiler helps you pinpoint
bottlenecks.

In this particular case, showing that a company can get to gross profit
streaming purely by web is valuable info -- it shows that the hoops Joost is
going through to do P2P distribution may not be necessary. It also chips away
at the assumption that pipe-owners have a natural advantage. I did some work
in this area, and I had thought Hulu would get murdered by their bandwidth
costs.

~~~
run4yourlives
_Different measures of profit help you figure out which bits to concentrate
on,_

My argument is that they almost always make bad situations look better, and in
effect you end up ignoring core problems to focus on a much easier to believe
"bit to concentrate on".

For me, as a founder, the best numbers are the ones that are the most
difficult to beautify, since those will be the ones that are ultimately most
accurate to the health of the overall business.

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iamdave
> _Hulu has fewer than 1/10th as many users as YouTube and serves an even
> smaller fraction of streams, so that is entirely possible._

Hulu also markets to a completely different crowd. YouTube is user-generated
content. Hulu is a user-focused service. That's not a hard dichotomy to
perceive, so on that front alone it's pretty obvious to know that numbers will
be different.

