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In a bid to increase video views through user delight, YouTube is likely to launch its ad-free subscription version in October, at around Rs 650 per month.
Seems like the world’s largest online and digital video platform is rolling up its sleeves to take on the Netflixes of the world. This is in line with what its head of content and business operations, Robert Kyncl, had said at the Code/Media meet somewhere in February this year.
This service will reportedly begin some time in October 2015, and word is, it will cost around Rs 650 a month. No confirmations, of course, but that’s the buzz on the net.
Around a billion users use YouTube’s free ad-supported service each month. What will be interesting to see is the revenue tradeoff – how many of those free-service users opt for the paid service. And what ad-revenue loss each migrant to the paid ad-free service, represents.
Another important aspect, of course, is that an ad-free service would obviously not go down well with the content providers who have their own channels on YouTube. What happens to the ad revenue they share with Google? Word is, they obviously aren’t happy, but Google is determined to put end-user delight before revenue-partner delight on this one with a take-it-or-let’s-part kind of ultimatum. That sounds a little strange, considering whatever the technology, content is always king.
But wait, this message is certainly not likely to go out to content owners who have created massive followings for their special content. They are the ones who provide a big part of the glue that has users stuck on YouTube. So one believes Google will continue to handle them with kid gloves through packages like Google Preferred, which it introduced for the most liked video channels. It sells these on the lines of ad sales for traditional television, on an upfront basis.
‘Online video threatening FTA Broadcasters’
YouTube and Facebook, the two giants who are squaring up for a Sumo-intensity grapple for the ad revenue dollars, are already giving FTA broadcasters cause for concern. Television research specialist Ampere Analysis has found that Free-to-air broadcasters are facing “an increasingly serious existential threat from online video”. Ampere Analysis says this on the basis of 15 Multi-Channel Network investment deals between 2012 and 2014 that it has assessed.
“Free-to-air broadcast television faces an increasingly serious existential threat from online video, with globalised platforms such as YouTube becoming increasingly competitive to national and pan-regional broadcast channels,” Ampere Analysis has said on its blog. “The average YouTube user now consumes close to 9 hours of videos on the service per month – nearly 20 minutes per day.”
“Multi-Channel Networks (MCNs), which aggregate, build and monetise audiences across a variety of OTT video outlets (the most prominent being YouTube), are consequently investment and acquisition targets for major commercial groups vulnerable to the changing TV landscape. Over the past three years, the biggest of these MCNs have been snapped up for sums ranging from £200m up to nearly $1bn, mainly by the larger media groups.”
That, incidentally, is just the introduction to a major report Ampere Analysis has published. To get the report, contact Ampere Analysis here