Hulu to Hurt Cable, Not Google

Hulu.com has been billed as a rival to YouTube, but Google's (GOOG) popular video site has nothing to worry about.

The real victim here will be cable TV.

Hulu, an online video site that went live with a test version on Monday, was developed in a partnership between General Electric (GE)-owned NBC Universal and Rupert Murdoch's media empire, News Corp. (NWS). Unlike YouTube, Hulu offers free viewing of full-length films and TV shows from the media giants.

But Hulu has none of the grassroots, user-generated content that has made YouTube a global phenomenon. Instead, it merely provides a way for consumers to watch TV online, bypassing the headaches, limitations and costs of cable or satellite TV service.

"It's time for cable companies and telco TV providers to go on fear watch," says Forrester Research analyst James McQuivey. "As consumers get more access to their favorite TV shows and movies through their Internet connection, they're going to start asking themselves why they're paying their cable bills."

The launch comes as the future of established news and entertainment content creators -- from newspapers to magazines to TV networks -- has been called into question by the rise of Internet search portals. The Web firms suck up the offline media's ad dollars by delivering everyone's content free to consumers with the ease of a mouse-click.