Sun, November 23, 2008
We've all seen the video clip of the bulldog skateboarding, the exploding Mentos or the audio clip of my car being stolen (yeah, it's an authentic message left on my answering machine after my car was stolen). User-generated video clearly can drive big traffic but, to the folks at YouTube, they seem to be considering a major shift in their business strategy to put a larger focus on monetizing, long-form professional content.
YouTube recently announced it is now officially in bed with MGM (Metro-Goldwyn-Mayer) to carry feature full-length films online (should live events be considering a deal like this?). My guess is that this is just one of many more partnerships to come as more and more consumers are turning to the web to watch professional content and Youtube knows it. Furthermore, their competitor Hulu (NBC Universal), while it has a fraction of the impressions that YouTube gets, is making significantly more revenue per video impression than YouTube. This just reinforces that the major advertising revenue is still following professional versus user-generated content.
To me, this is all so interesting. I've continued to be baffled by YouTube's business strategy - they are clearly hosting content that is illegally posted and getting away with it (although currently being sued by a bunch of folks). Yes, we all check out user-generated content on their site but that's not going to generate enough revenue to justify the Google purchase price. YouTube wants to be the first place you go to catch a clip you missed on TV, heard about on the news, etc. Until they can appease the professional content creators, I think their long-term success remains somewhat in limbo as consumers can't count on YouTube for delivering on that brand promise.
YouTube has a solid brand name and a big lead in the game of collecting eyeballs - but, as sites like Hulu continue to build steam and a new crop of user-generated video sharing sites continuing to pop up, they should be taking nothing for granted. There is an opportunity for live entertainment here – particularly if we can ultimately figure out the rights to with all of the unions to make this happen. Whether it’s a stream of a full show or just pieces of the shows, if delivered in a high-quality format, I think the video publishing space is all ears to ideas right now as the competition heats up. Put your thinking caps on and you may wake up a gazillionaire.
Check out this story talking about the MGM deal.
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