Is YouTube Ready for Primetime? Google Wants to Stream TV, for a Fee.
by Peter Kafka
Posted on December 1, 2009 at 3:00 AM PT
YouTube, which is already trying out the movie rental business, wants to get into TV too.
Google’s video site has been trying to convince the TV industry to let it stream individual shows for a fee, multiple sources tell me.
YouTube already lets users watch a smattering of TV shows for free, with advertising. Now it envisions something similar to what Apple and Amazon already offer: First-run shows, without commercials, for $1.99 an episode, available the day after they air on broadcast or cable.
Sources say the site’s negotiations with the networks and studios that own the shows are preliminary. But both sides seem optimistic, since models for such deals already exist. No comment from YouTube.
The biggest stumbling block may be consumers. That’s because Google (GOOG) is talking about streaming the shows instead of letting consumers download them to their computers, as both Apple (AAPL) and Amazon (AMZN) do. But the networks and studios, which control pricing, will want to sell the streamed shows at the same price as downloads; they fear that offering them at a different price will force them to go back and rework their existing deals.
Executives at YouTube and TV insist that the disparity is simply a perception problem and cite studies showing that most people who download TV episodes only watch them once, anyway. But that’s a tough sell.
It’s also possible that YouTube may skirt the issue by launching a TV rental business without the big hits that Apple and Amazon offer. One possibility: The video site could start by moving immediately to long- and mid-“tail” shows and videos that aren’t available other places and don’t have to match existing prices.
No matter how it proceeds, YouTube is likely to be just one of several outlets trying to get consumers to pay for TV on the Web in 2010.
Among others: In addition to its a la carte offering, Apple is trying to create a monthly subscription service. Hulu, the free TV site co-owned by News Corp.’s (NWS) Fox, GE’s (GE) NBC Universal and Disney’s (DIS) ABC, is expected to launch a subscription service of its own. And cable operators like Comcast (CMCSA) will be launching different versions of “TV Everywhere” services, which give subscribers expanded access to online shows.
TV executives are generally enthusiastic about all of the above, since they are meant to create additional revenue streams without threatening the industry’s existing business. That is, they’re supposed to protect existing business from the digital disruption that has ravaged music, newspapers, etc.
But while Web users have an insatiable appetite for video, they’ve yet demonstrate much interest in paying for it. If any of this is going to work, that will have to change.
