Peter Kafka

Recent Posts by Peter Kafka’s Mike Hudack Survives “The Video”–Now Trying to Keep His Video Site Afloat

Let’s get this out of the way: Yes, CEO Mike Hudack was one of the 20 20-somethings who appeared in “the video”–the now sortofinfamous lip synch clip made by a bunch of vacationing Web kids.

And no, Hudack doesn’t feel bad about it or the brief blogstorm the clip created.

In any event, Hudack has real-world worries, like how to keep his video distribution site afloat.

The thesis behind, and every other video site, is simple: Lots of people are spending lots of time watching Web video and advertising will eventually follow.

But there are lots and lots of video sites out there (there will be fewer, soon), and advertisers have yet to really embrace Web video. Those who do buy Web video ads generally view them as experiments.

And experiments are hard to justify during a recession.

The good news, Hudack says, is that Web video only gets cheaper to produce and distribute–he says bandwidth costs have come down 40 percent in the last year. He’s now paying about a penny every time someone views one of his videos.

And the number of views keeps increasing: In September, said it had served up 51 million video views, up 250 percent year-over-year, and Mike says that number bumped up to 55 million in October.

And since only distributes clips made by pros and semi-pros, he can attach ads to most of those views, unlike YouTube, the Google (GOOG) video unit which can only monetize a small fraction of its inventory.

And the really good news is that Hudack has a new slug of cash to keep him afloat and allow him to expand. He won’t disclose the size of his newest round, led by Bain Capital Ventures, but I’m told it’s in the $3 million to $5 million range.

(Irony alert: Hudack doesn’t mind showing up on a widely distributed vacation video, but he won’t go into his company’s financials).

[This is normally the point in the post where I’d play you a clip of a video interview I’ve conducted with Hudack. But since the Amazon (AMZN) “Next Day Shipping” feature apparently just means “give us an extra $19 and we’ll get it to you when we feel like it,” MediaMemo is still camera-less.]

Instead, take a look at this episode of “Political Lunch,” a show and note the way that sponsor HBO has been integrated into the clip.

The hosts give the Time Warner (TWX) pay-cable channel a shout-out at the beginning. Then, there’s a brief overlay ad early in the piece, followed by a preview of an HBO show at the end of the clip.

It’s a good example of what Web video can offer an advertiser–a chance to get right in front of viewers, when they’re already engaged in the screen, without being too obtrusive.

Now the trick for, and everyone else in Web video, is convincing a lot more advertisers that this is worth their while.