Monday, May 6, 2013

You Tube Subscription Service

Multiple revenue streams matter.  Broadcast learned from cable and caused cable operators to pay for carriage to assure more revenue.  Hulu built Hulu Plus to add a subscription service above its free streaming platform.  And You Tube wants to do the same.  "The subscription service would not be for general use of the web site. Reports suggest it would be for specialist video channels. However, it could involve as many as 50 video channels, with single channel subscriptions for $1.99 a month. Details of the plan were told to the The Financial Times over the weekend."  So will consumers pay for You Tube original channels?

For Hulu Plus, the offer includes theatrical movies and network series.  Netflix and Redbox offer similar know content.  But for You Tube, the hope is that these original networks offer unique content that consumers will pay a monthly subscription to gain access.  It works IF consumers value this premium content and see value in paying.  It works IF these same consumers have a credit card or have parents willing to pay for their children to watch. It works IF the consumers sees enough original content each month for the cost to determine that it makes sense to not cancel their subscription.  So You Tube has some big IFs to overcome. 

Other streaming networks have discovered different paths to new revenue.  Partnering with known media brands in the print and tv space works.  AwesomenessTV was purchased by Dreamworks Animation.  HuffPost TV is airing on cable network AXS TV.  I see the key to success for streaming content is based on multi-platform partnerships.  With so much content being created to fill new distribution growth, breaking through the clutter is key.  That is best done by working across platforms.  A great example is Defiance, a video game partnering with SyFy Channel.  It creates exposure, interest, and hopefully most important, engagement that leads to revenue growth.  Not that content on a single platform can't survive; it is just that it is harder to get off the long tail and into a quantifiable audience share.

Can You Tube Channels survive in a subscription model?  Perhaps tied with another media platform, like a magazine subscription, the chance for success is greater.  Without, I wonder if consumers will indeed pay a monthly subscription fee for original You Tube content.

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