In an effort to compete against companies such as Amazon Prime, Hulu and Netflix, YouTube is in discussion with studio and production companies that are based in Hollywood. According to reports, the online video service company is trying to obtain streaming rights in Hollywood while also negotiating licenses and listening to pitches for new content.
The Online Video Sector
The online video sector has grown into a billion dollar industry, with global revenue from online TV and video services expected to reach $51.1 billion in 2020. In 2015, the industry is expected to generate $26 billion. By 2020, revenue from subscription-based streaming-services is expected to outpace revenue from ad-supported services.
Already, Amazon, Hulu and Netflix have struck deals allowing them to provide thousands of hours of network television content along with their original television content. YouTube, on the other hand, only has content partnerships with online stars who far short of being household names with most viewers. Meanwhile, Hulu is reportedly expected to spend $1.5 billion on content, a figure that is similar to what Amazon spends. Netflix, on the other hand, spends approximately $3.3 billion on content. Netflix has also generated a number of popular original productions, such as “House of Cards,” while Amazon has gained attention with its original show “Transparent.”
While YouTube is moving forward with trying to bring Hollywood content to its site, how viewers will respond to the content remains uncertain. Currently, full television episodes are not particularly popular when they are posted to the site. Music videos, on the other hand, are among the most popular videos posted to the site. Currently, the company plans to continue to offer official music video content through its ad-supported service as well as through its paid subscription program.
The Future of YouTube
To help increase revenue, YouTube recently launched YouTube Red with a $9.99-a-month subscription fee. Subscribers enjoy watching YouTube videos and streaming music without the inconvenience of ads. As always, the site will offer content that has been created by YouTube members, but the company wants to add premium and exclusive Hollywood content in order to make the subscription more appealing.
To work toward obtaining the desired content, YouTube ambassadors have been sent to Hollywood to meet with production companies and studios. These ambassadors include Susanne Daniels, who is a former programming chief of MTV who joined the YouTube staff this summer, and Kelly Merryman. Merryman is a former Netflix content executive who joined the company late last year.
With discussions still underway, it remains to be seen if YouTube will simply license current shows or will fund original productions. If the company pursues original productions, it could result in an increase in employment opportunities in Southern California has production companies and studios gear up to produce the required content.
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