Both ReadWriteWeb and CNet's Technically Incorrect were in a tizzy yesterday over an analyst's forecast that the ad revenue for big media backed Hulu will surpass that of YouTube in 2009.  You can read the posts here:
Chris Matyszczyk, the author of the CNet post, says that the estimate sounds reasonable, calling into question Google's thinking in acquiring the website.  On the Other hand, ReadWriteWeb's Frederic Lardinois is less pessimistic, pointing to a recent deal struck between Google and MGM to bring full-length movies to YouTube.

Hulu does have a following within the Engineering Group at Compendium, primarily for some of the TV series that are available on there.  Those who use it have high regard for its user interface, which is both sleek and functional.  Still to be seen is whether Hulu can break past the early adopter crowd and into more mainstream audiences.

Aside from offering streaming video and earning ad revenue, I've never really looked upon YouTube and Hulu as being direct competitors.  Hulu is a channel for big media content, backed by big media (Fox and NBC behind it).  It's becoming the official online presence for TV and some movies.

Although the MGM deal portends YouTube crossing over into Hulu's turf, the real draw of YouTube has always been the "you" part. Yes, there may be scads of videos of questionable legaility, and there may well be some really inane videos of the "Leave Britney Alone" variety, but there are some videos of merit.  Unlike Hulu, provides a channel for people to share home movies.  Others publish educational screencasts on YouTube.

In short Hulu is a walled garden, and YouTube is wide open territory, with plenty of space for eveyone to stake a claim.  If you believe that the future of the web is to become a one-way channel of information, like TV, then Hulu is where things will be headed.

For some reason, this grates on my views of what the net should be.  I consume a lot more information from the net than I do TV, mainly because I have a strong say-so on what appears before me when I surf the net.  The sheer variety of the things out there on the net is something I find to be way more engaging than most of what's on the TV schedule.

The utlimate question is whether YouTube has a viable business model.  Is there some combination of advertising or fees that can help YouTube earn its keep?  The advertisers seem to think their dollars are better spent on Hulu, according to the analysts

If the advertising pie is a zero sum game, then YouTube probably has to turn to some sort of fee structure,  most likely to those who upload content.  But given the sheer volume of existing clips on that site, it will be a tough sell.

YouTube has some challenging times ahead, but Google is packed with a lot of smart people.  I wouldn't rule out the possibility that they help YouTube find its place.  Betting against Google is wager with very long odds.