"Hulu is creating significant value for users, advertisers and content owners," said Jonathan Nelson, CEO of Providence, one of Hulu's joint-venture partners. "This balance, together with aggregated professional content and an expanding base of over 200 brand advertisers, is establishing Hulu as a compelling online video monetization platform. Hulu is a bright spot in the new media landscape."

What About CBS?

Disney adds full-length episodes viewers can't find on YouTube, such as Who Wants To Be A Millionaire, Private Practice, Scrubs, Lost and Grey's Anatomy, as well as classics from ABC's library and movies from Walt Disney Studios.

"It's all about content people want to watch. The more content you get, the more people are going to watch," said Michael Gartenberg, a vice present at Interpret. "Getting Disney/ABC on board is huge because it increases the amount of tier-one content on Hulu that people want to watch. It also leaves CBC out there by itself and makes you wonder how long it's going to be before CBS gets on board as well."

CBS may still be keeping an eye on what Gartenberg calls an "experiment." This experiment introduces plenty of questions to the broadcasting marketplace and Hulu's role. What is the future of Hulu? Will Hulu go mainstream and eventually get integrated into traditional TV sets? Or will Hulu be constrained to PCs and perhaps cell phones only? What does this mean ultimately to the content business?

"If you can imagine Hulu content on the big screen in the home, then it really has the potential to be a game-changer," Gartenberg said. "No one is quite certain how the game is changed as a result, and that's why this is still a very big experiment. But getting Disney on board validates the experiment all the more."

Pushing the Experiment

Others are also keeping a close eye on the experiment that brings Internet content to television screens and offering some predictions. Inside Digital Media estimates more than five million consumers are watching Internet video on TV by using it as a giant monitor for their laptop computers.

Inside Digital Media estimates one-third of homes have a flat-panel TV. By the end of 2011, the firm forecasts nearly 90 percent will have at least one such unit.

"Much like the iPhone is perceived as a phone when we take a call and a portable Web-browsing device when we surf the Web, the television is evolving into a dual-function appliance. In one context it will remain a television as we have always known it. In a second context it is becoming a huge window into the Internet cloud ," said Phil Leigh, senior analyst at Inside Digital Media. "We conclude that the laptop as Internet gateway is primarily a forcing factor that will induce TV-set makers to manufacture browser-centric televisions."