YouTube takes on cable TV

YouTube appears more like a bona fide television channel every day: it has now begun serving up programming on a pay per view basis with a series of partnerships including some established TV brands and a handpicked initial selection of Creators.

[ABOVE:  Sesame Street aka The Jim Henson Co is among the first 53 channels available via YouTube subscriptions.]

Around 53 partners have launched premium content channels via the international service, and while the selection might be small you shouldn’t underestimate the significance of the step, which puts the Google service squarely in competition with cable and satellite providers.

There’s a new game in town

That’s perhaps not too surprising considering YouTube has been attempting to define a new future or television for some years, but its Apple-like Google TV product failed to achieve the expected traction because content providers wouldn’t play ball. Google’s response? Nurture its own content creators while working with those from the established television industry who might play its game.

Chosen channels can charge between $0.99 and $6 per month for access to their content — 53 channels are available right now. There’s a list of pilot channels here. Every channel has a 14-day free trial, and many offer discounted yearly rates.

Of course, with YouTube now available on computers, phones, tablets, television sets and via some game consoles (such as the PS3), the introduction of the service pretty much leap frogs existing cable and satellite services.

TN Marketing VP, Neil Rice, thinks subscription-based services will be a hit, saying: “Consumers will pay for high-quality content.”

“Consumers have gotten used to getting their content on the web,” said Laura Martin, senior analyst with Needham and Co. “The question is whether they will pay for it.”

Bandwidth providers — many of whom might be offering their own TV services — are unable to do too much about Google’s new offering. The company clearly hopes to leverage the popularity of its service to circumvent the difficult negotiations it has been trying to have with established brands who have been recalcitrant to join new TV service offerings for fear of losing their existing profitable business arrangements.

“I think everyone who creates video programming should be worried about the growth of new content channels,” said BTIG analyst, Richard Greenfield. “Broadcast TV has been hurt by cable. Broadcast is still a very large business despite fragmentation.”

More to come

YouTube will expand its PPV/subscription-based TV offering in future, the company promised, writing on the YouTube blog:

“This is just the beginning. We’ll be rolling paid channels out more broadly in the coming weeks as a self-service feature for qualifying partners. And as new channels appear, we’ll be making sure you can discover them, just as we’ve been helping you find and subscribe to all the channels you love across YouTube.”

Wrestling firm, UFC is also among the first wave of YouTube subscription channel providers. “We’ve had a great presence on YouTube. Everyone knows we put a lot of content up. Dana (White) puts his vlogs on YouTube. We look at this as another way for people to access content. We’ll have no ads. We’ve chosen not to. We had the option,” said Edward Muncey, UFC’s Senior Vice President of Digital.

The company is open to new channels signing up for the service, it admits: “Just as the partner program empowered creators to take their channels to the next level, we look forward to seeing how this great community of creators moves ahead with a new way to reach the fan communities that made their channels a hit. You’ll be hearing more from us, and them, as we get creator and user feedback and build out this exciting offering.”

Get creative

Ultimately the success of YouTube’s stab at fee-based television service will come down to content — that’s good news for our content creation customers. We might observe that Gen X and Y-ers are already used to turning to the ‘Net for their content, which suggests channels targeted at those groups might map an easier route to success.

We also note YouTube’s major investments in content creation as evidenced by the Creator network, which offers creatives free access to studio-grade TV production studios (built by us in the UK) to help them realize their creative projects.

“The obvious question is whether YouTube can offer anything people actually want to support this way, and whether creators of online content will see enough upside as well,” notes Dan Gillmor. “I’d expect Google to pump some serious money into the operation, at least at the outset. But a generation of video watchers has become accustomed to YouTube as a free or ad-supported service. I’m agnostic, verging on skeptical, about the prospects, but I’m also glad to see this kind of experimentation.”

Meanwhile there will be some interest in finding out whether UK funny man, Ricky Gervais, will make his forthcoming YouTube series, Learn Guitar with David Brent, available on a subscription basis, as that’s the kind of high profile offering we’d anticipate YouTube will also be looking for as it attempts to build a market for this new service.

If you’re interested in help and advice for your TV or video production work, do drop us a line, as enabling people to realize their creative dreams is what we do here at Dreamtek.

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