The business model for Joost—and most of its competitors—is straightforward. Whenever someone watches a show, Joost runs a 30-second ad for every eight minutes of content and divvies up the money paid by those advertisers with the show's owner. Joost won't reveal the exact split.

Joost has always sold itself as a grownup version of YouTube. It has none of the user-uploaded content that can create copyright horrors or make an advertiser cringe when its product is placed next to home video of someone barfing. (Yes, you can find plenty of that on YouTube.) Joost's system protects content so that no one can steal it and ads can't be skipped. Also, videos can be blocked geographically, so if CBS has the rights to show Numb3rs only in the U.S., no one can use Joost to watch it in Poland. Joost is supposed to be a safe moneymaking haven for content owners and advertisers, yet neither top-quality programming nor ad dollars are cascading its way. As a private company, it does not report financial results, but as of early 2008, it had just 44 advertisers.

And now it has serious competition.

I'm at another restaurant, in Los Angeles. This one is called the Lemon Moon Café, and it offers a lot of exotic quiches and salads. Across from me is Jason Kilar, the C.E.O. of Hulu. He is smart and chipper and perfect-looking, like the president of the richest frat on campus. (The restaurant was his choice.) Kilar, 36, grew up at Amazon under the tutelage of C.E.O. Jeff Bezos. He worked there from 1997 to 2007, launching the company's DVD business and becoming a senior vice president. The most significant lesson he learned under Bezos, Kilar says, is "focusing on a world-class consumer experience." He has brought that to Hulu, which is a clean, simple site. You navigate by scrolling through thumbnail graphics of shows, which include 30 Rock, House, The Office, and The Simpsons. Click on a show and you see menus listing episodes. Click on an episode and it starts playing. It is much more like a mainstream TV experience than Joost.

Hulu had an advantage in starting up in mid-2007. By then, Adobe had begun work on a high-def version of Flash Player 9. The result: Hulu requires no download and no separate player. Thanks to Kilar, Hulu has another advantage over Joost. A show on Hulu can be embedded in any other website. The embedded Hulu video has commercials—served up by Hulu—that are tracked and counted and then paid for by advertisers. Consumers can watch Hulu videos on Hulu.com and on other sites that aggregate videos, such as Veoh and AOL. Bloggers can drop Hulu shows like King of the Hill into their blogs, and no matter where in the U.S. you watch a Hulu video on the Web, Hulu counts it and charges advertisers.

"The big challenge is having content find its audience," Kilar says. "It was important to me to do it virally. With Peter [Chernin, Fox TV's boss] and Jeff [Zucker, head of NBC], it was a quick conversation. They instantly got it."

Later, I ask Zucker why NBC and Fox invested in Hulu rather than going with Joost. "I was not that comfortable with Joost," Zucker says. "We wanted greater control over how our content was presented and distributed, and the key things advertisers and consumers are looking for are ease of use and a safe haven." By safe haven, he means a site where no one will stumble across those barfing videos or even Motors & Babes.

Hulu plans to be more than just a Fox and NBC outlet. "We're talking to ABC, CBS, and Viacom," Zucker says. "We're optimistic they'll be a part of it."