Have you noticed changes at YouTube lately? If you are already familiar with its subscription model, you will notice a “TV Shows” channel available. It has acquired over 3 million subscribers, since launching in August 2012. It offers both free and paid content.
The channelization of YouTube is significant. It marks a shift for the platform, from mostly “user generated” content, to include “production” content, thus paving the way for YouTube to evolve into a mega destination of content consumption for a broader audience. The potential is many times greater than its current form hosting primarily short clips; over time its impact is likely going to be felt in the media industry.
At this early stage, YouTube is building aggregation portals, a destination for TV audience for example. While some contents are offered directly by YouTube (through agreement with content owner), others are simply links to other channels such as ABC, PBS, Starz, Smithsonian, etc.
There are some issues to be worked out. Content is still limited. YouTube clients on most TV sets don’t support access to channels yet. Paid shows are priced at $1.99 each, with some episodes showing only a few hundred viewers. The success of Netflix demonstrated that the subscription model is a lot more attractive than pay per view model. YouTube must have taken notice. According to an AdAge report, YouTube has invited select content owners to submit applications for pay “channels” earlier 2013. Google released a statement, saying “there are a lot of our content creators that think they would benefit from subscriptions, so we’re looking at that.”
According to vidstatsx.com, YouTube’s “TV Shows” channel is adding well over a million subscribers per month. A potential threat to Netflix is looming, given their similarity. Netflix still has a lead, with its established client base, particularly in Television sets, not to mention its paid subscription base. However, YouTube can catch up quickly with its brand recognition, marketing reach, financial strength, and Google’s negotiating power with content producers.
There is room for more than one player in this space. After all, they might be moving somebody else’s cheese. A replacement scenario may unfold just as mobiles VoIP are replacing landline in telephony. In the years to come, it may be a long and slippery slope for cable companies.