YouTube began adding some 3,000 films from major studios for rental in the U.S. on Monday, doubling its catalog in a bid to keep up in the rapidly escalating arms race among online video providers.
In a somewhat surprising move, YouTube has begun a series of moves and deals with movie studios in order to add movie-style content to its website. The underlying rationale here is first that the video-sharing website is hoping to increase its average time-per-visit figure (currently at 15 minutes per visit), which in turn increases its existing advertising revenues. After that, however, YouTube is looking to leverage its massive existing user base, which was 120 million in 2009 and most definitely far more than that nowadays, into a formidable entry into the attractive online movie streaming market. Though still a nascent market, the overall growth of online movie streams was measured at 37% between 2009 and 2010 alone. For YouTube, this seemed like a logical next step, as rental fees would also give rise to a new revenue stream for the company.
And yet, don't consider YouTube as having sold out to enter the Netflix business quite yet. In fact, YouTube is moving one step further down the value chain into the realm of content production. Compared to Netflix, it seems as if the overarching goal for YouTube is not to stop at mere content management but rather to eventually develop its own content production and distribution services. If anything else, its $100 million investment in their own original content channels seems to be proof enough.
Given current trends in the movie industry, YouTube's foray into full-length features makes sense. While online video viewership increases, the consumer willingness to spend for movies has dropped. At 71% YoY growth in video viewing, the average amount of time spent per user watching videos has now reached almost 15 hours in one month alone. Additionally, as Internet piracy has driven down the perceived value of the movie theaters experiences (which has simultaneously raised in price tremendously in this time), many consumers see less value in going to the movie theaters nowadays. Many would prefer to pay a fee of up to $3 to download a movie and to view it from the comfort of their living rooms rather than pay extra for what was once the allure of the "movie-going experience." Though the box office and DVD sales markets still amass $10 billion and $17 billion in revenue, respectively, YouTube hopes that these latest moves will position itself favorably as the economics of the industry (and the corresponding revenues) shift with a more digital, sedentary consumer lifestyle.
What's interesting, however, is the necessary "ideological break" that has made YouTube what it is today. The site offers the average citizen a chance to have his voice heard; it has been a true haven for "open source video productions." But now, it is as though the licensing of professionally produced content brings Youtube away from the source of its success. Granted, most users probably won't know the difference and won't view YouTube in a different light, but the risk is still there. An overproduction and over-distribution of professionalized content on YouTube could doom an otherwise logical and attractive business move for the firm. Nevertheless, it remains to be seen how successful they are in their goals of increasing time on the YouTube site.
Article:
http://www.variety.com/article/VR1118036622
In a somewhat surprising move, YouTube has begun a series of moves and deals with movie studios in order to add movie-style content to its website. The underlying rationale here is first that the video-sharing website is hoping to increase its average time-per-visit figure (currently at 15 minutes per visit), which in turn increases its existing advertising revenues. After that, however, YouTube is looking to leverage its massive existing user base, which was 120 million in 2009 and most definitely far more than that nowadays, into a formidable entry into the attractive online movie streaming market. Though still a nascent market, the overall growth of online movie streams was measured at 37% between 2009 and 2010 alone. For YouTube, this seemed like a logical next step, as rental fees would also give rise to a new revenue stream for the company.
And yet, don't consider YouTube as having sold out to enter the Netflix business quite yet. In fact, YouTube is moving one step further down the value chain into the realm of content production. Compared to Netflix, it seems as if the overarching goal for YouTube is not to stop at mere content management but rather to eventually develop its own content production and distribution services. If anything else, its $100 million investment in their own original content channels seems to be proof enough.
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| Pretty soon YouTube could be everywhere, except hardware of course |
Given current trends in the movie industry, YouTube's foray into full-length features makes sense. While online video viewership increases, the consumer willingness to spend for movies has dropped. At 71% YoY growth in video viewing, the average amount of time spent per user watching videos has now reached almost 15 hours in one month alone. Additionally, as Internet piracy has driven down the perceived value of the movie theaters experiences (which has simultaneously raised in price tremendously in this time), many consumers see less value in going to the movie theaters nowadays. Many would prefer to pay a fee of up to $3 to download a movie and to view it from the comfort of their living rooms rather than pay extra for what was once the allure of the "movie-going experience." Though the box office and DVD sales markets still amass $10 billion and $17 billion in revenue, respectively, YouTube hopes that these latest moves will position itself favorably as the economics of the industry (and the corresponding revenues) shift with a more digital, sedentary consumer lifestyle.
What's interesting, however, is the necessary "ideological break" that has made YouTube what it is today. The site offers the average citizen a chance to have his voice heard; it has been a true haven for "open source video productions." But now, it is as though the licensing of professionally produced content brings Youtube away from the source of its success. Granted, most users probably won't know the difference and won't view YouTube in a different light, but the risk is still there. An overproduction and over-distribution of professionalized content on YouTube could doom an otherwise logical and attractive business move for the firm. Nevertheless, it remains to be seen how successful they are in their goals of increasing time on the YouTube site.
Article:
http://www.variety.com/article/VR1118036622
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