Wednesday, May 8, 2013

Google, Yahoo Interest in Pay TV?

News reports suggest that YouTube (owned by Google) is getting ready to charge for access to some of its specialty channels, and Yahoo has been in contact with Hulu about a possible bid to buy the premium video service.

Hulu has been on and off the market for the last few years.  When its owners first tried to auction off the service, deals fell through when networks wouldn't commit to continuing to license their content to Hulu.  This dropped the value of the service significantly, well below what the owners sought, so Hulu was pulled off the market.  A few months back, the network owners once again said they'd be open to selling the service, a number of groups expressed interest (including Amazon). 
  Yahoo has been seeking entry into the subscription video on demand (SVOD) market recently.  It had a deal in place to purchase a majority stake in Dailymotion (a video streaming service owned by France Telecom) - until the French government vetoed the idea of foreign majority ownership.  Reports have Yahoo's CEO Marissa Mayer, making initial contact with Hulu execs; but any talks are still in the early stages.  Yahoo's, and Mayer's, interest in online video was evident at a recent Wired conference:
“I think video is really important … video is something that we’re all innately designed and born to experience, everyone is born being able to watch and to hear,” she said. “Video is just this amazing format.”
 YouTube is already the biggest player in online video, but as a free hosting and streaming service.  What's new is a story in the Financial Times that states the service is ready to implement a pay wall for select specialty channels - possibly within a few weeks.  The official YouTube response to the story was that there was "nothing to announce" at this time - well short of a denial.  What YouTube insiders told the FT reporters was that YouTube was
“looking into creating a subscription platform that could bring even more great content to YouTube for our users to enjoy and provide our creators with another vehicle to generate revenue from their content, beyond the rental and ad-supported models we offer.”
  What that suggests is that the service is exploring, and probably already developing, a subscription / pay wall system that could be applied to specific channels/content providers.  The system might help some high-demand YouTube specialty channels with revenues, but it's more likely that YouTube wants the system in place to help attract new premium content channels such as movie studios and sports leagues.  In other words, those content creators that are now licensing content to various SVOD operators, and are thinking about cutting out the middleman and marketing direct to viewers.
  YouTube was quick to calm fears, promising that the vast bulk of user-generated videos would remain free.

I see these as reflecting the growing awareness of the importance of online video and licensing in the expanding TV viewing marketplace, and moves to help online  services position themselves to take advantage of that corner of the market as it expands.

Sources -  Yahoo's Mayer Has Met With Hulu Execs in a Preliminary Look-See at Premium Video Unit,  AllThingsD
Would Consumers Pay For YouTube Channels?,  VidBlog

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