Oct 22, 2015

Is YouTube Red Poised To Be The Next Netflix?

Originally published at TVREV.com on October 22, 2015

YouTube rolled out it’s new subscription service Red yesterday in an announcement that was full of surprises.

To begin with, the $9.99 service includes both Google’s gaming and music applications, along with the ability to watch videos commercial-free. Videos are downloadable too, for offline consumption. And then there’s original content, consisting of series starring some of YouTube’s best known creators.

So how does it all stack up? TV[R]EV takes a look.

This is a very clever addition as it ties in Google Play users while targeting the millions of people who use YouTube (and by extension, Vevo) as their go-to music source. Red will allow users to utilize a feature called Background Play that (as the name implies) allows videos to keep playing in the background even when you open another app. This will be a huge bonus to anyone who wants to listen to music on YouTube without having to keep the app open and the phone on— it essentially positions YouTube as a competitor to Spotify and Apple Music and more than justifies the $10/month fee.

The ability to download video for  offline viewing is probably the single most requested feature for OTT sites. Most forbid it due to fear of piracy. Amazon, however, took the leap last month, allowing users to download video for future viewing and now YouTube follows suit. This will be a very desirable feature, though it’s probably more desirable for long-form content than for short-form, given the ability to facilitate a binge-viewing jag, YouTube’s decision to allow it is more of a “nice to have” rather than a “must have.”

YouTube’s Gaming app is a Twitch competitor, designed to give users access to game-related video (as opposed to actual games.) Including this in the YouTube Red package is a smart move though, as it gives another group (hardcore gamers) a reason to sign up for Red.

Original Content
YouTube needed to do this— there’s not much “professionally produced” content that hasn’t been snatched up by Netflix, Hulu and Amazon, and there’ not much professionally produced content from their own stars. What Originals does is give series-like structure to creators like Pew Die Pie, hopefully transitioning them from free-form videos shot with barebones technology into something much slicker and more easily marketed to both advertisers and audiences.

The danger here is that the transition might alienate their creator’s current fans, by making them appear too “corporate.” At the same time, there’s the danger that many of these creators might not transition well to more structured formats. Fortunately for YouTube, they don’t need “many” of them to make the transition— just one or two per season will do, provided those one or two become the sort of breakout hits that help YouTube Red obtain and retain subscribers.

It’s also unclear how much the creators are being paid for the new programming and how it matches up with the ad revenue they’re currently drawing. The split clearly has to be in their favor to make the new formats worthwhile.

The Name
As Digiday was quick to point out, RedTube is a well known porn aggregator. Oops.

The Prospects
While YouTube Red will be able to sweep up a lot of YouTube’s hardcore adult fans, the real difficulty is going to be with the middle school and high school students who make up a sizable percentage of their base.

It’s not that the service isn’t worth $9.99/month—as noted earlier, the music service alone is probably worth that for someone who’s not currently using Pandora or Spotify—it’s just that the potential subscribers’ parents aren’t likely to see the value of YouTube Red’s proposition. $10 a month is a lot to ask parents to pay so that their special snowflakes don’t have to watch commercials. It’s a lot to ask too, if the only value is that the special snowflake gets to watch Pew Die Pie in more structured, series-type videos.

That’s why we see Red as being a tough sell to parents, with lots of conversations that contain some variation of “I’m not paying ten dollars a month, so you can skip through commercials.”

So the question becomes how many of YouTube’s adult users are willing to put up the money for something that (music service aside) doesn’t offer a whole lot of additional value, particularly since YouTube’s ad serving system, which lets viewers skip ads on many videos after 5 seconds, is not particularly intrusive. Similarly, original short form series with YouTube stars are intriguing, but probably not $120/year worth of intriguing.

We’ll reserve our final judgement for when the product is rolled out for real, but until then, the chances for success are looking just okay.


Chucky said...

I do love how you immediately follow:

"As Digiday was quick to point out, RedTube is a well known porn aggregator. Oops."


"While YouTube Red will be able to sweep up a lot of YouTube’s hardcore adult fans..."

Accidental or intentional doesn't matter to me. Bravo in either case!

Unknown said...

Just noticed your comment Chucky-- that was not intentional, but you are correct, it is awesome.