YouTube’s New Play for Video Streaming Dominance

Things continue to move at a blistering pace in the streamed video market. As I recently noted, Netflix is positioning itself to be a dominant player by acquiring original content like a new television series, “House of Cards,” which Netflix would arrange to distribute online before any other outlet carries it. Add to that the announcement just days ago that Netflix is acquiring licensing rights to the series “Mad Men” at $1 million per episode.

Now comes the somewhat curious news that satellite TV service Dish Networks has won a bid to acquire the assets of bankrupt Blockbuster. If the bankruptcy court approves the acquisition, Dish will gain access to Blockbuster’s customer base. Of course, it will also inherit some 1,700 stores, which could be problematic. But what Dish really wants is to grab Blockbuster’s video streaming capabilities in an effort to more effectively compete in the digital marketplace.

Well it turns out that Google’s YouTube, the web’s top video site, has some ambitious plans of its own. YouTube “is looking to compete with broadcast and cable television,” reports the Wall Street Journal, with a “major overhaul” that is said to include a new emphasis on channels. While YouTube already offers user-created and topic channels, the new approach would reportedly highlight around twenty channels that will feature “several hours of professionally produced original programming a week.”

The heart of the issue for YouTube is the fact that, suddenly, every competitor seems to be converging around video streaming. While YouTube owned the market not long ago, it now competes with the likes of Amazon and Hulu on the web. It also competes with Netflix, who has moved more rapidly than expected into video streaming and, increasingly, with traditional broadcast outlets that stream video over the web as an enhancement to their television programming.

In the past, YouTube was a kind of amateur video marketplace, but in recent years, commercial marketers have looked the other way as videos of ads and movie clips have been posted by users, even if they didn’t have copyright authority. Why? Because of the power of viral marketing. And now commercial marketers use YouTube as a matter of course to support their campaigns. YouTube, meanwhile, has been a passive platform for all this sharing of intellectual property, reaping the benefit of advertising revenue via the Google model.

But now, it seems, YouTube’s free ride may be coming to an end – to compete, the company has to start paying for content. Google, reports the Journal, “has so far remained unwilling to pay licensing fees on the same scale” as its competitors; instead, it is planning to spend as much as $100 million on programming as a “less expensive” alternative. Supposedly, YouTube is talking with Hollywood talent agencies in the hope that some of their clients will create new YouTube channels.

Moving from amateur-dominated free video to advertiser-supported professional content It will be a tricky transition for YouTube – one made all the more challenging by big-spending competitors.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

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