What's Between YouTube And Netflix? An Opportunity

The two biggest names in the online video business, Netflix and YouTube, are at opposite ends of the spectrum. They leave a sizable middle.

YouTube is free media, mostly populated by user generated content and user generated content that has become popular enough that some of it—PewDiePie,Grace Helbig and lots more--became their own brands and business enterprises.

Its pre-roll is pre-eminent, whether effective or not. There are so many YouTube channels and online video is so plentiful, advertising is bought in big bunches, a kind of targeted BB gun approach.  There are YouTube branded channels and a lot more. It’s a clip service and a search engine and jukebox. In the time it took you to read these two paragraphs,  something like 100 hours of video was uploaded to YouTube, depending on how fast you read. It’s very close to a working model of garbage in/garbage out with some big exceptions.

On the other end is Netflix, an all-pay service that grew out of the tradition of schlepping to the shopping center to pick up a video at Blockbusters. Reed Hastings, again making news today, has steadfastly maintained there won’t be commercials on Netflix, and his service is the signature of online video in terms of size and quality and, probably aspirations.

In the middle of YouTube’s primitive art and Netflix’s pay service are all the rest. Streaming video still needs to create a truly successful ad venue for the kind of content that, in a flexible definition, approaches the quality (but avoids the sensibility) of television.  Crackle, owned by Sony, seems to be a likely place. AOL, in various places, makes the most interesting attempts.

When Amazon recently tested its new pilots—offered for free--they were sponsored by Geico. That was an interesting test of what it might look like if there was a roster of new, original, broadly-based programming that was also an online vehicle for advertisers.

That’s a huge piece of turf only beginning to be served, but as OTT happens and television and the Internet become intertwined, there’s going to be a place where new advertising and new content come together.  

Hulu, the most natural place for that because it’s actually owned by the networks, rams commercials at its users. For millions of users the price is right and the feeling is familiar.

But eventually a different model will emerge that figures out an elegant way to do that and it wouldn’t be totally surprising if it’s a video service that is operated by advertisers themselves. They can promise they will stay away from deciding what the content is just for the opportunity to have exclusive access to the audience.  Though, they probably don’t have to be that pious.  

Consumers have a much more benign attitude about branding—selling out is a signature of success in a media-saturated era—so when Colbert sells pistachios with a wink, they get it and forget it.   It could be that someday native advertising won’t be called native or advertising, but just…content.


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