YouTube is Shelling Out Big Bucks for Original Content
YouTube is reportedly shelling out big bucks for a shot at becoming a full-fledged network of original video content. This is in addition to being the largest video sharing site on the Web by a gigantic margin. According to reports, Google’s YouTube is paying upwards of US$100 million in advances to personalities and studios to produce original content to air on the site. This means that YouTube would be in a more direct competition with the likes of Fox, CBS, NBC, ABC, and others.
With all this video hosting comes the high cost of bandwidth and storage. Each video must be stored and backed up, with instant accessibility and almost real-time comment updates. This is a costly business, and one that many pundits speculate is costing Google more than it’s worth as each year passes.
To make up for these losses, YouTube has created a roughly 20,000 channel network of partners, sharing in ad revenue in exchange for increased ad presence on popular channels before, during, and sometimes after the videos are played. In addition, paid content providers such as Vevo have also made up a majority of the video giant’s revenue.
Now, by advancing the cost of producing dozens of unique professional-quality shows made exclusively for YouTube, Google can create a significantly more advertiser-friendly environment where ads can be played against programming with predictable quality and content. Instead of buying ads to play against keyboard cats or a catchy auto-tuned video, advertisers can opt to have pricier ads placed on the kind of content they would normally find on major networks.
Some of the production companies included in the initial advance are Warner Bros. and News Corp.’s ShineReveille. In addition, high-profile personalities such as Tony Hawk are also set to make original content for YouTube.
This certainly wouldn’t make YouTube the first Internet media company to create a network of unique content for distribution online. Revision 3, TWiT, and many others are already doing so with positive results. There is a chance, however, that a major player like Google could legitimize the format even further, making it easier for online content providers to find the advertising they need to monetize their creations.
So, does YouTube have what it takes to finally take the step towards becoming a truly professional content-producing network? Will this trend of next-generation cable providers continue on a path that could render what we know of television today obsolete?