Posted by: Douglas Macmillan on April 16, 2009
In its most recent bid to make YouTube more attractive to advertisers, Google is introducing new sections to the online video site that will be reserved for TV shows, movies, and other professional content. The general design of YouTube will remain, as will the guitar-playing teens, break-dancing babies, and other homemade movies that make up the bulk of the site. Yet the cleanly organized menus and sleek video player of YouTube’s new pages look to be Google’s response to the success of Hulu, the startup video site jointly owned by News Corp. and NBC Universal.
In a phone briefing with journalists on Apr. 16, the company also announced a new advertising product called Google TV Ads, which will allow marketers to run television-like spots before, during or after certain videos, as well as enhanced tools for tracking the performance of those ads. Google TV Ads are designed for the newly added professional content, and won’t run in conjunction with clips produced by amateurs.
Will this be the tack that finally puts YouTube on the path to profitability? In a report issued earlier this month, Credit Suisse analysts estimated that Google makes around $240 million in revenues from the site each year, but shells out $711 million on bandwidth, content licensing, and other expenses. The hard part about turning those numbers around, now more than ever before, is that advertisers have grown squeamish about displaying their brand next to unsavory, user-generated videos, and haven’t been willing to pay as much for impressions on the site as they do on Hulu and elsewhere.
YouTube will continue to be the premier site for do-it-yourself video uploads – but in a separate, walled-off part of the site, it will cultivate its own version of Hulu that will hopefully bring in higher ad rates and a greater variety of advertisers.
To win over advertisers, it’s clear that Google needed to first court TV and movie studios. On Thursday, the company touted new content partnerships with Sony Pictures, CBS, MGM, Lionsgate, Starz, and others, that will increase its library of professionally produced to hundreds of movies and thousands of TV shows. But much of this material is more than a decade old, such as shows like “Alf” and “Party of Five.” And none of the new content is exclusive to YouTube.
I personally have started watching Hulu quite a lot, and it’s precisely because the site offers up new shows like The Office and Friday Night Lights a few days after they air on TV, if not sooner. New shows are the most watched videos on the site, and I think a major reason for Hulu’s upstart success. When pressed by journalists to name new TV shows that will be offered on YouTube, Google spokespeople could only name one: CBS’ Harper’s Island, a show I hadn’t heard of until today.
It’s not that YouTube doesn’t understand what’s hot in the online video market. It’s more likely that the studios are getting stingier with their content. Many of them are witnessing the success of Hulu and devising plans to replicate that model themselves, on their own sites – never mind YouTube.