Even Happy Advertising-Based Digital Platforms Are Thinking SVOD

Following in the footsteps of CBS, HBO, and others, YouTube wants to join the hunt for subscription-video-on-demand business.

We know prospects for digital video revenues are encouraged by soaring estimates, with big publishers  doing everything to shift resources from the likes of display advertising, search and other digital areas to video platforms  -- especially “premium” video platforms.

That said, YouTube really isn’t in the “premium” area of the digital video world. But that’s not to say its short videos -- user-generated in large part -- aren’t doing yeoman’s work of pulling in big advertising revenues. Estimates are that YouTube had $5.6 billion in revenues at the end of last year.

But we know media companies -- as well as other businesses -- are all about spreading the risk, as well as looking for new revenue--generating businesses.

And so, Susan Wojcicki, YouTube’s CEO, said this at an industry event: "YouTube right now is ad-supported, which is great because it has enabled us to scale to a billion users; but there's going to be a point where people don't want to see the ads.”

She added that a subscription arrangement is "an interesting model" and that YouTube is "thinking about how to give users options."

YouTube does have paid subscription product, as a niche business, allowing some content creators to charge for access to videos they post.

YouTube has for a long time eyed the growth of Netflix and Hulu. Some years ago Hulu had the forethought to star its subscription model, Hulu Plus -- to compete with the likes of Netflix -- a service which trims, but does not eliminate, advertising content connected to its programming.

You think about Hulu, you think TV shows. Netflix?  A library movies, and of course those new edgy TV series you can view in bulk:  “Orange is the New Black” and “House of Cards.”

YouTube? Yes, we know the brand. It’s a lot of everything.  YouTube will no doubt continue to let viewers opt out of watching pre-roll advertising after five seconds.

The question will be: Should YouTube start looking like other popular video sites, as a hedge for the future?



1 comment about "Even Happy Advertising-Based Digital Platforms Are Thinking SVOD".
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  1. Douglas Ferguson from College of Charleston, October 29, 2014 at 3:39 p.m.

    As lowest common denominator content was so successful at ruling broadcast viewing behavior in the last century, the content on YouTube is well-positioned for non-linear success in this century (even if you've never heard of Smosh or Pewdiepie).

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