YouTube chases TV's future

11 May 2011

NEW YORK: YouTube is to begin renting out 3,000 movies from major studios, as part of what the video platform believes could represent a move towards becoming "the TV channel of the future".

The Google-owned service has signed deal with Warner Bros, Sony Pictures, NBC Universal and Lionsgate, and is to charge $3.99 for the most recent releases, $1 more than for older titles.

YouTube even revealed that some films might be added to its catalogue the same day they are rolled out on DVD.

Salar Kamangar, head of YouTube, stated this agreement showed how much the climate had evolved since the site went live six years ago, when watching video was an experience fragmented across devices and locations.

"Today there's increasingly just video, and it's available everywhere: on a phone, a tablet, a laptop or a television screen, in your office, on your couch, in a cab," he said on an official blog.

"YouTube isn't about one type of device or one type of video. Content from traditional media partners, made-for-web and personal videos all co-exist on the site."

Kamangar reported that YouTube receives 2bn hits per day, with the typical visitor spending 15 minutes streaming material in this timeframe, measured against five hours watching TV.

"As the lines between online and offline continue to blur, we think that's going to change," he said.

"I can't predict exactly what the TV channel of the future is but we think more and more time spent on TV is going to be around web content and web video."

"I think the next set of media companies are going to be created on the web and that YouTube is going to be a big part of that."

The film rental scheme puts YouTube into conflict with rivals such as Amazon, Apple and Netflix, but only marks the start of the portal's longer-term ambitions.

"We want to get to a point where anything you can think of finding that is video related is searchable or recommended to you on YouTube," said Kamangar.

Rob Enderle, principal analyst at consultancy the Enderle Group, argued YouTube's latest initiative made strategic sense, although he warned Netflix has already established a strong position.

"It is a natural progression for YouTube," said Enderle. "Google recognises that this is becoming a content war ... Netflix right now is the company to beat with regard to online video."

Media owners are often reticent to hand web-based third parties material, usually because of worries about undermining existing sales and distribution models, or following on from piracy concerns.

However, Enderle asserted YouTube's move into this space constitutes "progress in the right direction."

"It starts to make everyone else more comfortable," he said. "As the dam starts to break, Google gets more and more competitive."

For James McQuivey, an analyst at research firm Forrester, YouTube's wider objectives remain far from realised, but the opportunities for targeting boasted by the web should prove advantageous.

"Television is very much the Holy Grail and at the moment YouTube is doing terribly there," he said.

"In its current concept, they can't break through. People still think of YouTube as a place where people post funny videos of animals and laughing babies.

"To succeed in the living room they need to offer content that is customised and personalised."

Possibilities here may include making suggestions in response to past habits, the recommendations of friends, a viewer's chosen "mood", or something a celebrity has commented on.

Financial services specialist Citigroup estimated YouTube's revenues stood at $825m in 2010, a total expected to reach $1.3bn this year.

Data sourced from YouTube, BBC, Financial Times, AFP; additional content by Warc staff