YouTube Dips Its Toe in Full-Length Video Market

Oct 19, 2008  •  Post A Comment

YouTube officially entered the professional television business last week with the addition of some full-length shows from CBS, but the world’s biggest video site will need more than just one network’s programming to be a viable contender for premium ad dollars.
MacGyver on YouTube
Via an extension of its existing CBS deal, YouTube now carries full episodes of shows such as “MacGyver,” “Star Trek” and “Young and the Restless,” marking the first time the site has offered videos longer than 10 minutes and with pre- and post-roll ads.
While the library titles aren’t likely to drive a massive audience uptick, the move may help YouTube vie more aggressively for brand advertisers with network-skewing sites such as Hulu, NBC.com and ABC.com.
“It’s a good and probably necessary move for YouTube to remain competitive with premium content sites over the long term, notwithstanding YouTube’s dominant market share,” said Greg Sterling, principal with Sterling Market Intelligence. “It’s also smart because audiences will be more tolerant of advertising in full-length programming versus clips.”
But for this deal to be a game-changer financially, YouTube will need to build out a strong library of vintage TV and other full-length shows, Mr. Sterling said.
That won’t be easy, said James McQuivey, an analyst with Forrester Research. “We will see other network content on there, but NBC and Fox are going to ask [YouTube] to embed the Hulu player, like everyone else has,” Mr. McQuivey said.
YouTube said it’s aiming to land other TV network deals. “We think this is a big market, and we are happy to see consumers and content owners continue to embrace online video,” a YouTube spokesperson said.
But even if YouTube adds more network content, consumers may not flock there because many TV shows are already widely available other places online.
“There’s little reason for people already on YouTube to interrupt the site’s social, clip-focused experience to watch a full-length episode,” Mr. McQuivey wrote in a recent blog post. “And if you hit the Web knowing you want a particular TV show, you’re as likely to go to its home page as you are to go to YouTube.”
While premium content is a smart means to monetization, YouTube and its deep-pocket parent Google have other revenue streams at their disposal, said Will Richmond, industry analyst with VideoNuze.com. That includes the Google Content Network, which just scored a big win when it served up more than 14 million views for TV writer Seth MacFarlane’s Web series “Cavalcade of Comedy” in its first three weeks online.
“YouTube is wisely expanding beyond its roots in user-generated video to also offer premium video, as this is where online video ad dollars are flowing,” Mr. Richmond said.
But advertisers aren’t wowed yet. The CBS deal will add up to a few more streams for YouTube and some added reach for CBS, but won’t cause a major shift in consumer behavior, said Adam Kasper, senior VP and director of digital media at Media Contacts.
CBS sells the ads in its shows on YouTube.
Looking down the road, YouTube’s entrance into the professional TV space signals the emergence of three potential 21st century networks in Hulu, Google and YouTube, said Jamison Tilsner, co-founder of online video review site Tilzy.tv.
“They’ll share a lot of the same content, but they’ll compete on exclusive, tent-pole programming and user experience including video quality, discovery and social features,” he predicted.

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