YouTube grows up to act like TV
The oddball videos of gurgling babies, teenagers crashing their skateboards and synchronised wedding dances are still there. But they have been increasingly buried under what YouTube calls original channels – polished, highly produced videos financed by YouTube. It is part of YouTube’s strategy, started a year ago, to lure television viewers and advertisers by helping to produce high-quality videos that cater to niche interests.
Now Google, which owns YouTube, is stepping up that effort. It recently announced that it was adding more than 50 original channels to the 100 it introduced in the last year and expanding original channels to France, Germany and Britain.
Other online video platforms – including Amazon.com, Netflix and Hulu – are also trying to compete for viewers by creating original content. But transforming from platform to producer has been challenging for all, including Google. And it is hard to argue that YouTube, or any other video platform, is on a path to soon replace television – whether for viewers, content makers or advertisers.
“There are not any successes you can point to and say, this happened because of Google’s investment,” said James L. McQuivey, who studies digital video and television at Forrester. “What they’ve learned is that they haven’t invested enough.”
As part of the new effort, Google is investing a fresh $200 million in the channels – on top of the $100 million it invested last year – to market the shows, pay for production equipment and, in some cases, pay the full production costs.
The new channels, which will carry advertising and be available free, include producers with major media experience. ESPN has a sports channel, Grantland; Sarah Silverman and Michael Cera have a comedy channel, Jash; and Everyday Health has a beauty and health channel, Daily Glow. There are also smaller, online-only producers, like Tastemade, Digital Broadcasting Corporation and PopSugar. “I believe that every interest will, at some point, have a channel serving that interest,” said Robert Kyncl, global head of content at YouTube.
YouTube says that its push in this area has already created successes. The top 25 original channels average more than 1 million views a week, according to the company, and in the year since original channels were introduced, people have increased the hours they spend watching YouTube each month to 4 billion from 3 billion.
Several YouTube video producers, including AwesomenessTV, StyleHaul and Blip.tv, have received venture capital financing. Some have been acquired by big entertainment companies, including Nerdist Industries by Legendary Entertainment and Revision3 by Discovery Communications. And YouTube-financed channels have attracted prominent advertisers like Procter & Gamble, Toyota and American Express, though it did not give specific ad revenues.
Even so, YouTube is nowhere close to being the default home for high-quality video, analysts say. Video producers, McQuivey said, “are interested in this, but they’re not about to risk giving up a pilot on NBC in order to do a new YouTube channel.”
Advertisers, meanwhile, “still hold the 30-second spot on a pedestal, and the idea you would put that creative content into that inferior channel still bothers a lot of them.”
Though advertisers will increase their spending on digital video ads 46.5 percent to $2.9 billion this year, that is a small fraction of the $64.5 billion they will spend on television, according to eMarketer. And viewers who have spent decades in front of their televisions are not about to throw them out in favour of YouTube, he said. YouTube has learned the same thing, so it is going after younger people who have grown up online.
“The thing we learned is it’s certainly best to fish where the fish are,” Kyncl said. “In terms of making investment decisions and putting dollars at risk, we’re going to focus on audiences of 35 and below, who are already on YouTube.”
In addition to financing production, YouTube sells ads for the video producers. It takes its initial investment out of the ad revenue.
“That’s their secret sauce, a huge sales force all over the world,” said Jim Louderback, chief executive of Revision3, which will have a new tech channel on YouTube. “We’re pretty excited that huge sales force is going to be spending time finding revenue opportunities for the stuff we’re doing.”
Video producers say that in addition to financial support, YouTube offers a way to bypass television’s frustratingly slow production schedule.
Nerdist Industries recently decided to make a music video with the Fraggle Muppets. Three weeks later, a music video was on YouTube, made with the band Ben Folds Five, actors Anna Kendrick and Rob Corddry, the Jim Henson Co. and Chris Hardwick, a television actor and founder of Nerdist.
“What we found amazing about the opportunity was to go from ideation to production and having content in front of our fan base in a ridiculously short amount of time, and content that’s produced at television-level quality,” said Peter Levin, chief executive of Nerdist Industries.