Thursday, April 7, 2011

You Tube Offers Another Reason to Shaving or Cutting The Cord

You Tube's latest announcement, a better organization of its content into channels and a push toward more original programming, adds another reason for the consumer to downgrade (shave) or cut their cable subscription. And You Tube believes it can legitimately compete against cable and satellite for viewers. "The site is planning a series of changes to its home page to highlight sets of 'channels' around topics such as arts and sports. About 20 or so of those channels will feature several hours of professionally produced original programming a week, some of these people said. Additional channels would be assembled from content already on the site." Last month, You Tube acquired NextNewNetworks as one step to acquiring original content. Along with Hulu, Netflix, Apple, Amazon, and others, the web is becoming a serious alternative to cable viewership.

In this CNET article, cord cutting remains hard for most households to accomplish. "Between 2008 and 2009 alone, the firm said that 550,000 households cut the cord. Last year, it estimates 1 million households did the same." And those that do sometimes find themselves missing some of the programming unavailable yet on streaming platforms and come back to cable. Still the cable operators are today more affected then telco or satellite as their basic subs are leaving to go to the lower priced alternatives suc as FIOS, U-Verse, Dish, and Direct. Dish may already feel concerned with eventual cord cutting and has just bought out Blockbuster as a potential move to enter the streaming space.

The programmers seem pleased with this new stream and I suspect they don't see these new deals as revenue neutral. Liongate's recent agreement to sell Mad Men syndication to Netflix assumes that this new distribution platform won't hurt its cable and on demand deals. It is why Networks aren't excited about giving away streaming rights to cable for mobile devices when others are willing to pay for those streaming rights. And since cord cutting has not hurt the industry yet, programmers are enjoying the revenue from another revenue stream.

As for You Tube, their mission is now to keep their viewers engaged for longer periods of time. While they enjoy attracting a huge number of uniques, short form video encourages viewers to leave and not necessarily watch more. It is the same strategy some cable networks had when they first introduced their channels. Count TV Guide, E!, Comedy, MTV and others who moved their programming to 30 minutes and longer to keep eyeballs longer, grow ratings, and capture higher ad revenue. Where short form programming was once ideal on the web, viewers have not gotten more accustomed to viewing TV shows and movies on computers, tablets, and smartphones. And that is what is presenting serious competition to the cable platform.

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