YouTube remains the dominant video site online, but it’s built around user-generated, amateur videos. Hulu, on the other hand, has agreements with major TV networks that gives it access to current (and professional) programming — an area that YouTube has been trying to beef up for a few years now. That kind of programming is what attracts ad dollars, as the Times report explains:

Hulu’s rights to the current season’s TV shows have drawn interest from Google and Yahoo, in part because these popular programs have attracted more than 600 advertisers — including such major brands as McDonald’s, Johnson & Johnson and Toyota. Indeed, the site expects to bring in $500 million in revenue this year from advertising and proceeds from its Hulu Plus subscription service.

According to the most recent comScore numbers, Hulu showed about 1.3 billion of the 4.6 billion total video ads displayed in May.

(ComScore’s numbers include streaming ads only, and don’t include ad overlays or banner ads — both of which are common to YouTube.)

Hulu was the 10th most popular video destination in May, according to comScore’s count of unique viewers. But it was second overall in minutes-per-viewer, behind only YouTube.

None of the companies mentioned provided a comment to the LA Times.

The portal has a massive global audience of more than 600 million according to Microsoft. Different countries will have somewhat different looking MSNs, which it turns out is the source of roughly 45% of Bing’s query volume. Thus MSN is critical, at least for now, to Bing’s continued success. If MSN grows and gains users Bing will presumably gain and grow query volumes.

One of the very nice features of MSN is the “local edition” area, which contains news and other local information. The Local Edition now will include news and video content from NBC Local Media and Hearst Television. According to the press release:

Through partnerships with NBC Local Media and Hearst Television, we will receive around 3,000 news video clips a week across 36 local media markets. While anyone in the US can receive comprehensive local information from MSN Local Edition, we’re pleased to partner with these industry leaders to offer more compelling and relevant local video clips to customers in 35 markets. The new video content will be available in January 2010.

This local content and information will help create loyalty and valuable ad inventory for MSN, which in turn will benefit Bing as suggested above. Yahoo is also beefing up its local news assets.

According to today’s announcement (and more here), the new site combines videos from a variety of sources. The former MSN Videos offered original programming, as well content from the likes of MSNBC, Fox Sports, National Geographic, and others. Bing Videos will house that content, and offer web-based videos from sites like YouTube, Hulu, MySpace, and others.

Videos are organized into a handful of categories (News, Sports, TV Shows, etc.) and there are sections for “Hot Viral Clips,” “Last Night on TV,” and “Best of Bing” among others.

Overall, it’s a compelling interface with what appears to be a lot of content, and finding exactly the specific type of video you want is painless. It may help Microsoft add to its second-place video market share, but as recent numbers suggest, it has a long, long way to go to even approach YouTube’s dominance.

The release lays out the full scope of the partnership, said to be worth $500 million over five years.

Viacom famously and very publicly had a falling out with Google over YouTube distribution of its content and went on to file a lawsuit earlier this year against the search engine for copyright infringement. That suit is still pending and seeks more than $1 billion in damages against Google.

In that context, this partnership has the quality of “the enemy of my enemy is my friend.” However, both companies have mutual, self-interested reasons for doing the deal: Microsoft gets valuable and popular video content (e.g., The Daily Show), becomes Viacom’s exclusive ad serving partner for Viacom’s US inventory, and gets to sell ad space on Viacom sites not directly sold by Viacom. In turn, Viacom gets a way to monetize unsold ad inventory, although the company could have done that with any number of ad network partners. It appears that the real coup here for Viacom is the fact that Microsoft will buy airtime on Viacom TV networks and inventory on Viacom sites:

Microsoft will buy advertising on Viacom broadcast and online networks over a five-year period and the companies will work together on promotions and sponsorships for MTV Networks and BET Networks award shows.

While these are not revenue guarantees per se, they do represent payments from Microsoft to Viacom over five years. (However, they’re nothing like the ad revenue guarantees Google provided to MySpace.) And, of course, Microsoft gets brand and product exposure for its money. Beyond this, the relationship adds another high-value, marquee partner to Microsoft’s stable of ad distribution relationships, which include Facebook, Digg, and CNBC.com. Somewhat ironically, perhaps, most of these properties have a younger audience bias.

There’s more discussion on Techmeme.

The Mercury News article comes off Microsoft chairman Bill Gates making his regular appearance at the Consumer Electronics Show in Las Vegas last week. Last year, his comments at CES about Google being in a "honeymoon period" riled me to the point of taking Microsoft to task over its own honeymoon period:

Continuing on, Gates said:

"Whatever they announce, they announce. They’re in their honeymoon period, and anything they announce gets hype…. They will obviously branch out beyond internet search, but I think the expectations won’t live up to reality."

Let’s spin that around. More than two years ago — in June 2003 – Microsoft announced it was getting serious about search and launched the first part of its own crawler-based search engine. We were told then that Microsoft thought there was plenty of room for improvement in search. Good spin for a newcomer trying to make room in the space, but it was also true enough.

Last February, we finally got the polished version of MSN Search. It didn’t deliver anything better than Google or Yahoo or Ask Jeeves. Now a year after launch, it still doesn’t push past Google, either in terms of relevancy as Microsoft itself admits or in terms of traffic despite a multimillion dollar ad campaign.

How long does the honeymoon last? Because if Google’s getting a long one, Microsoft’s had a long one too.

Frankly, the honeymoon continues on, to some degree. The San Jose Mercury News article was also sparked by comScore numbers for December 2006 that don’t show Microsoft gaining share in general across the web. That’s related to this chart I’ve covered in the past:

The chart above shows Microsoft’s share of searches by various providers from October 2005 through October 2006. It’s been continually dropping. I’ll be updating these figures soon, but I don’t expect much change. (FYI, comScore’s search figures were just posted here and show after a rise in November 2006 — probably due to IE7 launching — Microsoft slipped slightly and has a 10.5 percent share for December 2006).

I’ve long felt Microsoft’s best chance is to be within the vertical search space. As I wrote after commenting on Gates’s honeymoon quote:

MSN Search has gotten better. There are a lot of good, talented people on that product. And the former MSN Virtual Earth — now Windows Live Local — is awesome especially for the ability to build custom maps that mix different types of business together. But it’s tiring to hear the Microsoft leadership just rip at Google rather than deliver successes that speak for themselves. CES was an opportunity for that, and it looks to have been wasted.

This year at CES, as the Mercury News article points out, Virtual Earth made it on stage:

"For Microsoft, this year, it’s a big, big milestone, because the products we’ve been working on for many years that are foundational products are now moving into the marketplace,” Gates said during his keynote speech at the Consumer Electronics Show last week in Las Vegas.

As Gates spoke, a Microsoft employee demonstrated Virtual Earth as an example of the type of Microsoft innovation the company is pursuing. Using an Xbox controller, the employee flew through a 3-D replica of Las Vegas projected on screen.

"This is pretty fun. It’s also practical,” said Justin Hutchinson, who ran the demo during Gates’ talk. "If I’m new to town, I can get a sense of where everything is.”

Fun, yes. But I agree with one analyst that perhaps it’s not that practical:

But even people who praised the product wondered if it might exceed the needs of the average person. "It seems like for most people’s practical purposes, 2-D driving directions with a richness of detail is what they are looking for today,” said Walter Pritchard, an analyst at Cowen and Co.

True, but then again Google Earth has a healthy active community. Google Maps, I’d argue, gained huge popularity because of the satellite views it offers which are far more fun than practical. But these things can build up mindshare, to the point people learn to turn to the products when they do want the practical stuff (even though when in the UK, I find more and more Google Maps directions are terrible — but more on that later).

Why Ask.com’s CEO left to join Microsoft is a sidebar to the Microsoft story, with senior VP Steve Berkowitz who oversees Live.com talking about turning Microsoft around, why he feels being the best in search isn’t as important as having that emotional connection with searchers (true) and other issues. Berkowitz Describes Steering Microsoft As Cruise Ship & Ask.com As Rowboat from us in December covers a similar interview with Berkowitz in the New York Times last month.

Back to vertical search, Microsoft hooking up with Hollywood from the Los Angeles Times covers how MSN Video hopes to gain key content deals and gain users. The story says comScore reports MSN Video is the fifth most visited video site behind Google’s YouTube, Yahoo Video, AOL Video and Google Video. The LA Times did a similar story about Google partnering with Hollywood and content owners last week.