Yahoo just spent $1.1 billion of its cash horde to acquire Tumblr, a blogging site with 300 million mostly young-ish visitors and 24 billion minutes of usage per month. Yahoo CEO Marissa Mayer's team can slap a lot of tasteful, personalized native ads into the Tumblr content streams to monetize the fast growing site. It's the same way that Facebook and Twitter hope to get into the tens of billions in revenue league, but it's a long and winding road.
Now Yahoo is taking a run at Hulu, with its 4 million subscribers paying $7.99 per month, original programming , and more than 70,000 full TV episodes. Hulu could immediately put Yahoo's video efforts and revenue in a different league.
The video site, currently owned by Disney, News Corp., and Comcast, generated $695 million in revenue in 2012 from ads and subscription fees, up from an estimated $420 million in the previous year. Yahoo had revenue of about $5 billion in 2012 from display and search advertising.
For comparison, Netflix has more than 29 million domestic streaming subscribers and had over $1 billion in revenue for its first quarter in 2013.
Hulu's 4 million subscribers, which doubled in the last year, would bring a Yahoo as growing recurring revenue stream and credit card accounts with subscribers who could be enticed to pay for other Yahoo services.
Video is an area that Yahoo has been building up over the last several years. The company has video content deals with ABC News, CNBC Conde Nast, NBC Sports and Wenner Media, in addition to orignal Web shows. According to comScore, Yahoo is among the top sites for video consumption.
Earlier this year, Yahoo tried to buy a majority stake in the site Dailymotion to boost its video presence in Europe and Asia but abandoned the attempt due to objections from the French government.
As reported by All Things D, Yahoo is offering between $600 and $800 million, depending on what content and licensing deals come with the acquisition. Yahoo is facing stiff competition for landing Hulu, including DirecTV, Time Warner Cable, and The Chernin Group and private equity players, Guggenheim Digital, KKR, and Silver Lake Partners.