The news that YouTube is adding 3,000 new movie titles in the US, available for rental, has been picked up this week by most blogs and papers which follow the online video industry. But ask yourself, would you rent a movie from YouTube?
Google (subsidiary YouTube) has to remember that it is up against Netflix and the perception is that online movies are free, or at worst cost $8 a month. They are free to customers paying $9 a month for online DVD rental. The online DVD rental offers a selection of about 100,000 pieces of video, and the online streaming has around 20,000, with past season TV shows and movies making up the bulk of them.
So for $3 or so for each movie, to watch on a YouTube device ‘ mostly PCs right now, although more and more smart TVs come with YouTube connectivity, and also Android tablets will have this feature for sure ‘ when Netflix appears to be free and on virtually every device. There is a subtle issue at hand here. Let’s imagine for a second that in many cases adults pay for the DVD rental service, and their offspring watch the free movies online, being more comfortable with that outlet. If that IS the case, then those youngster are in no position to BUY the YouTube rentals.
Netflix has existing customers who pay money and so online delivery appears to be free. Amazon had to invent a new category of customer, the Amazon Prime customer, in order to have some paid service it could attach free online video rental to. Amazon Prime is an upfront annual payment for a free delivery service for Amazon products with free video thrown in.
So what does Google, or specifically YouTube, get us to pay for, so that it can give away movie rentals for free? Right now it has nothing because it charges nothing. Which is why we ask why anyone would go there for paid content. It just doesn’t make sense.
Another issue here is that Netflix has systematically chased down devices which carry the Netflix application and will accept videos from its servers. YouTube has something of that in that smart TV builders all feel the need to offer YouTube, and also with the rise of Android Tablets from YouTube’s parent Google, which are ideal viewing platforms, as well as the almost defunct and underselling Google TV.
Perhaps if YouTube can develop content that is either unavailable elsewhere or which it paid for itself so owns exclusively, it will have a chance. Google is certainly capable financially of going to traditional TV studios and underwriting content in the same way as Netflix has lately, except that it has no surefire way of getting back that investment, until it picks up momentum in online video content and it may never achieve that.
The blog from Salar Kamangar, Head of YouTube, where detail of these 3,000 movies emerged, talked about films like Caddyshack (1980), Goodfellas (1990), Scarface (1983), and Taxi Driver (1976) which you can see are all ancient, but adds that recent blockbusters such as Inception (2010), The King’s Speech (2010), Little Fockers (2010), The Green Hornet (2011) and Despicable Me (2010). Even the latest of these films, the 2011 Green Hornet is already more than 28 days old on DVD and is carried by both Netflix and Redbox. So there’s absolutely no advantage here for YouTube.
Faultline has always felt that the way forward for video content online is not purely about bringing traditional content to the internet, but using the internet and other technology to fund, stimulate and create new types of content.
And it is far more important that YouTube has promised it will bolster existing investment in content from its 20,000 plus existing partners and it names Machinima (gaming video network), Annoying Orange and Ryan Higa, all companies or teams that are creating YouTube style content ‘ rather than traditional content. Kamangar seems to think they enjoy TV size audiences, but watching a 3 minute clip 14 million times is really just 42 million minutes of viewing, whereas 14 million people watching CSI Miami is 14 million hours (or 840 million minutes) just for one episode.
What YouTube really needs to be doing is creating a new exploitation sequence which makes innovators rich ‘ perhaps it would be 1) Found in the wild on the web 2) Produced and extended using YouTube funds, 3) Bid for on YouTube by professional TV studios 4) Remade and extended by professionals for longform viewing, either for rental or with advertising inserted.
Today the industry is obsessed in bringing existing movies and TV to the web, and that’s a good first step, but really that’s a done deal through Netflix and rivals will have to go a little further. What YouTube has to try to do is gradually move from shorts to longer viewing, which it owns.
Kamangar says that using initiatives like YouTube Creator Institute and YouTube NextUp and Partner Grants and $1,000 B&H Photo credits will bring out more original YouTube exclusive content. Kamangar promises to catalyze the creation of content using creators known from TV or Hollywood. This is a big deal and something quite new. It will have to think in terms of spending more than the price it paid for YouTube ($1.6 billion) on sponsoring this type of content ‘ hybrid content which draws from the web but uses professional skills to achieve TV production values.
Don’t expect Google to suddenly begin breaking out online movie viewing rental revenue in its P&L, not until Google has invested a whole lot more in the thought processes for owning longform worthwhile video content or simply a lot more hard cash.