Youtube has traditional media in its sights. With TV viewing figures declining and the time people spend on the internet increasing, advertisers are spending more money on new media. With over 1 billion hours of watch time per day, YouTube, the Google-owned video streaming site, is the largest user-generated video content site. It’s expected that YouTube’s revenues will grow to an estimated $4 billion dollars in 2018. So, if their current model of monetising user content is working and revenues keep increasing, why are YouTube concerned with making their own content? Why do they feel the need to compete with cable and streaming services such as Netflix?
It’s been 10 years since YouTube started offering creators a share of YouTube’s advertising revenue through their creator program. In 2016, YouTube revealed that it had paid over $2 billion dollars to creators through their partner scheme and this figure is expected to rise. Recently, YouTube has been taking steps to change the way it monetises content. They launched YouTube Red, the sites premium streaming service which directly competes to rivals like Netflix, Amazon Prime Video, and Hulu. Their first wave of YouTube Red original content focused on the stars the platform has nurtured from the early days of the streaming site. The first wave of shows starred Rhett and Link, PewDiePie, and MatPat from the Game Theory channel, to name a few. It seems as if the YouTube red initiative hasn’t gone the way that Google has hoped. It’s not been a disaster, but it’s far from the success stories of Netflix and Prime Video. In order to attract more people to the YouTube platform, Google has expanded the YouTube original initiative into content paid by advertising. This brings YouTube’s strategy closer to Network TV, offering free content on their main channels that aims to persuade viewers to subscribe to their premium content. Kevin Hart, Ellen DeGeneres, and Demi Lovato are just some of the mainstream names who have been brought on board to create content for the initiative. YouTube has also leaned on long time creators ‘The Slow Mo Guys’ to create content under the originals banner and they’ve have helped expand Rhett and Link’s existing entertainment show, ‘Good Mythical Morning’.
‘Good Mythical Morning’, Rhett and Link’s morning show that riffs on the late-night show format, is one one of the best examples of what YouTube is trying to achieve. The show sees the hosts complete challenges, chat to guests, and eat increasingly weirder and weirder things. Rhett and Link were some of the first creators uploading scripted content onto YouTube, and they have continued to succeed and flourish on the platform. Since becoming a YouTube Original, Good Mythical Morning expanded from one ten minute video to 22 minutes of content split between multiple videos. With the addition of their YouTube Red show, ‘Buddy System’, ‘Mythical’, the duo’s production company now resembles a traditional TV production company more than an internet start-up. YouTube are betting on bigger, more stable production companies like Mythical and moving away from the individual creators.
Considering the recent controversies surrounding some of YouTube’s biggest creators like Logan Paul’s suicide forest video, the move away from smaller creators is unsurprising. Smaller YouTube channels aren’t completely missing out though, YouTube is awarding grants to YouTubers who tackle social issues in their videos through their ‘Creators for Change’ initiative, but YouTube’s focus on smaller creators is becoming less of a priority. One way in which you can see this trend is YouTube’s recent policy change surrounding monetisation. Smaller channels, who have less than 1000 subscribes and 4000 hours of content, have been frozen out of the ad sense program. Granted, 4000 hours of views doesn’t create much revenue, but it does freeze out channels who have made it past 10,000 hours of watch time, the threshold that YouTube had previously required to become a YouTube partner. This policy change adds as a deterrent, as many creators saw this money on Youtube, no matter how small the amount, as an incentive to continue making content for the site. Many YouTubers have to turn to alternative revenue streams like Patreon, a service that allows viewers to donate money to their favourite creators, sponsorship deals, and selling their own merchandise, to make a conformable living wage. If you’re just starting out in the creating content for YouTube, this presents a real barrier.
Are there any alternatives to YouTube? Their most immediate competition Twitch, the Amazon-owned gameplay streaming site, has recently been making big strides to attract YouTubers from the YouTube. Twitch traditionally focused on video game live streaming, but they are starting to add features that will help other types of video content live on the site. They have already signed major YouTube gamer producers like Jack Septicai, to create exclusive content for the site. The truth is, YouTube is the biggest video streaming site on the web by a big margin. Is it impossible for a competitor to overtake them? No, but the challenger would have to compete with Google’s vast resources and the brand recognition that YouTube has. Amazon, which owns the biggest cloud storage platform on the web, and with their recent foray into consumer technology, might be the company to take the throne from YouTube, but it won’t be easy. Startups have tried to compete in this space too. In 2015, Vessel had convinced prominent YouTube creators to release their content early on the new platform, with users paying $3 a month to access the platform. The promise of watching videos a week earlier than on YouTube was not an enticing proposition, and the company was bought and shut down by Verizon 18 months after launch. Realistically, YouTube is sitting comfortably at the top of the pile and it seems unlikely it will be knocked off of the top spot.
If YouTube is the king of online video, why can’t they achieve their goal of becoming a top tier Network? It turns out that the traditional TV industry works in a very different way. TV Networks create content for their channels and have complete control over what can and can’t be shown. This allows advertisers to know which content they are advertising against. This allows brands to know that the show they are appearing in is brand safe. This is a major distinction and the reason why advertising has been pulling their ads from YouTube. YouTube has to keep their creators happy, giving them autonomy over the content they create as well as keeping the advertisers happy whom ultimately pay their bills. The YouTube preferred advertising list exists to try and mitigate these situations, but that doesn’t always guarantee it is a safe place to advertise. You just have to look at the aforementioned, Logan Paul, who, until recently, was on the list. The best way YouTube can achieve their ambitions is by making sure they have content that they are actively involved in and gain the trust of their advertisers.
YouTube is in an impossible place. Stuck between their ambitions and their heritage. YouTube has its creators, an asset that is unique to them, but it seems like that also creates it’s own challenges. It seems for YouTube it’s a case of using them or losing them, even if that means taking the good, with the bad.