Posts tagged broadcast

Last year it was revealed that YouTube clocks up more than one billion views a day. Wow, but how can you make money on people viewing your site for free?

It’s a dilemma Google has faced since purchasing the video-sharing site for $1.65 billion in 2006. But over the years, the site has signed several deals with broadcasters and movie studios which have generated some revenue. It has even added advertising around some of the most popular videos. But none of these attempts have seen the site on the right side of the black bottom line. So, will the sites furore into the rental market finally be the site’s solution for profit?

Consumers will pay for the movies through Google’s payment service, Google Checkout. Google and the content supplier will split the revenue, with the partner getting the majority, a YouTube spokesman said.

There are a few issues that need to be assessed here. Firstly, how big is the rental market given that movies are now readily available to download illegally and for free, and secondly, as an advertiser, would you pay to put your advertising around a rented film on YouTube?

So, back to the rental market. Blockbuster said last week that its fourth quarter and fiscal 2009 earnings would be sharply lower than expected due to weak holiday and international sales. The once-mighty movie rental chain said it now anticipates a net loss of $193 million.

Apple brought in TV programme and movie rentals at the beginning of 2008. Although, since then Steve Jobs has admitted that sales have not yet reached his expectations.

DVDs are so cheap these days that sometimes it’s cheaper to buy then rent. Just go down to HMV around sales time, some movies go for as little as £3.

But media companies could be enticed by the more flexible business model YouTube is offering. Unlike Apple’s iTunes Store, which has set tiers of pricing for rentals of movies, Google is allowing partners to set the price that it will charge consumers and how long they want the rental to last.

But what about convincing the consumer? Last year, a study into the state of Video-on-Demand (VOD) in the UK, from the perspective of the viewer, revealed that fragmented delivery technologies, confusing rights restrictions and expensive download charges risk driving viewers away from legitimate VOD services. Many viewers are keeping their use of VOD to a minimum, while others are turning to illegal download sites.

However, as our home computers become bigger (the new Apple for example is 27 inches), consumers are starting to merge functions of the internet with their viewing habits meaning that this could work out in YouTube’s favour. Moreover, Yahoo is bringing the internet to TV screens with its new widget which it announced at the Consumer Electronics Show two weeks ago.

So, it is possible that this could pay off for YouTube. It will enjoy some revenue incoming from the broadcasters and movie studios, but how much will these players pay to have their film distributed on such a platform when the price is up to them? My guess is not a hell of a lot, not when the likes of Amazon and Apple are already out there doing it while still trying to make it a success. The real money for the media distributors lies in the ability to pedal an extremely exclusive and expensive deal complete with the advertising to go with it.

But YouTube maybe able to multiply rental profits with the use of advertising. It has long been discussed at the YouTube offices the possibility of offering free content in exchange for advertising. Could this work down the track?

My concerns over YouTube’s bid to get onto the rental market are mainly to do with all those internet users out there pedaling content for free. Sharing content also, and let’s face it, that’s what YouTube is all about.

I think that YouTube can only really pull this off successfully if it were to make exclusive deals with content providers as more and more studios are uploading their own content form their own sites (catch-up services such as the BBC iPlayer). Also, snippets of shows are often uploaded to YouTube by users. Perhaps the content rules need to change again that govern what can and can’t be uploaded to the site by its users. However, that would see the most popular videos miss out on the ad revenues they are afforded once their video reaches a certain amount of views (YouTube sells ads against popular content).

As now well known by YouTube, it’s all a game of trial and error. Do you think it’ll pay off?