On the heels of a report which found that online ad revenues will likely surpass those of print ads in the next year, television networks are poised to increase the number of ads run during episodes of shows viewed online. Will Richmond of VideoNuze reports that ABC intends to double the amount of advertisements displayed when viewers watch episodes of ABC shows on the network’s website after implementing a similar policy for its iPad app. Sponsor According to Richmond, who was briefed by ABC executive Albert Cheng, the network’s iPad app has been downloaded over 800,000 times and has served 4.2 million episodes of video in just over two months since its April 3rd launch. Yesterday, says Richmond, ABC launched a new ad initiative on the app that would double the amount of ads seen during programs in some cases – an adjustment that will soon be seen on ABC.com as well. Typically, online episodes contain between 2 and 3 minutes of advertisements while traditional television broadcasts contain roughly 20 minutes for each hour. While the difference in time for ads between TV and online is significant, online ads have been found to be more effective despite being run less frequently. Therefore, it only makes sense that broadcast networks want to increase their online ads. ABC isn’t the only network making shifts in online ads for viewing television episodes. Just recently, Cartoon Network announced it would also be increasing ad numbers for online video, and other networks are pulling away from stream aggregators like Hulu to have better control over the ads and revenue. When Hulu and Comedy Central could not agree on revenue splits, the cable channel chose to remove two of the most popular Internet generation television shows – The Daily Show and The Colbert Report . Instead, Comedy Central is only allowing viewers to watch these shows on the network’s homepage. Could other networks follow in their footsteps in hopes of gaining more control over advertisements? Currently, ABC still allows viewers to watch shows both at its homepage and on Hulu, but if it sees decent returns from doubling its ads, it may not hesitate to remove its content from the aggregator. While “Hulu” is becoming a household word for “online video” in the same way “TiVo” and “Kleenex” have evolved to mean “record” and “tissue,” other devices and services are still vying for competition. With set top boxes like the Roku and free services like Boxee , there are plenty of options for networks to syndicate their content and control their advertising. Discuss

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In a recent interview, Hulu CEO Jason Kilar told technology reporter Om Malik that his company was “very bullish” on mobile, even going so far as to say “we will embrace every device.” That’s a funny statement, considering that the company has been touting that same sentiment for years but has yet to launch anything for mobile, be it an app or simply a mobile-ready streaming site. Now, with the launch of the iPad just around the corner, the rumors of an iPhone/iPad Hulu app are rising up again. But there’s a bigger mobile web than just the one accessible via Apple products, and that may be what Hulu has its eye on now. “We don’t think about one device only,” Kilar said. However, going mobile is going to be a challenge for Hulu. And it’s not as simple as re-encoding a few videos, no matter what you may have heard. Sponsor Problem A: Hulu’s Business Model Needs Work The fact that Hulu exists at all is somewhat of an amazement. Through tenuous connections with major studios, the collaborative, experimental effort to bring streaming TV to web (and make it profitable) has managed to attract a number of users in the U.S. Although the audience size varies widely depending on who’s counting, the company has managed to become a household name thanks to eye-catching commercials on NBC featuring actors from the network’s top shows. But there’s a problem facing Hulu: in-video advertising is, apparently, not as profitable as once hoped. In fact, it’s just too expensive , says Marc Ruxin, the Chief Innovation Officer for ad agency network McCann Worldgroup. Hulu has been aware of this problem, though, and has been hinting towards the launch of a subscription service , with News Corp. chairman Rupert Murdoch telling an investor conference last fall that the company, was looking at “adding subscription services and pay per view” options. Through the subscription model, Hulu could potentially generate enough revenue to keep the studios happy and maybe even encourage them to offer up more programming. Unfortunately, the subscription model has yet to launch and the profits from video ads have been far too lean for some Hulu participants. Recently, for example, Viacom pulled two of the top shows – The Daily Show and the Colbert Report – from the site, claiming that they simply weren’t earning enough money via the advertising model currently in place. Viacom Inc. Chief Executive Officer Philippe Dauman said that “on the current economic model for Hulu, there’s just not much in it for us to continue at this time.” And so the situation degrades. So what is Hulu doing now? It’s trying to attract more viewers to its site with the launch of ” If I Can Dream ,” an original series that premiered earlier this month. The fact that they’re now making the foray into this sort of online programming is somewhat worrying. After all, if hit video webisodes alone made for a profitable service, then YouTube would have achieved profitability ages ago, instead of (maybe) getting there this year , five years post-launch. Let’s face it, original programming is a bonus for Hulu users, but it’s not going to take the place of hot shows like the now-departed Comedy Central fare. Problem B: Will Apple Allow a Hulu App on the iPhone/iPad? Another problem? Hulu has been planning to delay its iPhone app launch until a subscription model was in place, according to earlier reports . But with the biggest names pulling out, subscriptions could be a harder sell. Still, even if Hulu was able to make subscriptions happen, there are no guarantees that Apple would ever allow them into the iTunes store, especially considering they’re offering a competing product. (See: Google Voice banishment from the iPhone , for example). Meanwhile, Hulu’s online site doesn’t work in the iPhone’s web browser because it was built in Flash. If Apple rejects the Hulu app from iTunes, the company’s other option is encoding all their site’s content in H.264 and make that available via HTML5, the new web language that offers streaming video sans plugin. Since this has already been done, a Hulu app could launch a player on the iPhone or iPad, if, of course, Apple allowed them to do so. If not, then a mobile site would have to be built in HTML5 – video controls, overall UI, advertisements and all. That’s no simple process. What’s Hulu Doing Now? So is this the plan Hulu has decided on now? It’s hard to know for sure. Like Apple, the company is incredibly secretive about their plans and product roadmap, often refusing to respond to calls and emails entirely, even to say “no comment.” And yet, the Hulu iPhone app exists. We’ve spoken to someone who’s seen it…but that was ages ago. For all we know, iPhone/iPad app plans have since been scrapped to work on a new solution that works around any potential Apple restrictions. But sources inside Hulu have clammed up lately, meaning they’re either building something top, top secret…or perhaps nothing at all. We hope it’s the former, because frankly, an iPad without Hulu is a sad, sad affair. But will we ever see a real app? At this point, we’re not holding our breath. Discuss

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