In its never-ending quest for quality content, YouTube is once again talking to Hollywood studios and independent producers about bringing premium shows to the streaming video platform.
According to a Reuters report, one source claimed that YouTube Inc. may pay between $1 million and $3 million for a series of programs, with the possibility of adding marketing funds to the mix as well. Another Reuters source added that YouTube is specifically interested in videos that are shorter than traditional 30-minute TV programs.
This isn't the first time YouTube has pursued premium content. In 2011 the Google (Nasdaq: GOOG) subsidiary began investing millions of dollars to build up ad-supported channels around different topics like arts and sports. While YouTube has far more viewership than sites such as Netflix Inc. (Nasdaq: NFLX) and Hulu LLC , the OTT service is known primarily for low-quality user-generated content rather than more lucrative professional fare. YouTube would like to increase its video revenue with premium shows that draw in a larger share of online ad dollars.
YouTube has deep pockets thanks to parent company Google, but it's also competing in an increasingly crowded video field. Many over-the-top service providers, from Netflix and Hulu to Amazon.com Inc. (Nasdaq: AMZN) and Yahoo Inc. (Nasdaq: YHOO), are now investing in original content, and that's not even including the traditional pay-TV operators who are ramping up their own online efforts.
Beyond TV Everywhere initiatives, Comcast Corp. (Nasdaq: CMCSA, CMCSK) has made headway with Streampix, its web-based subscription rental service, and AT&T Inc. (NYSE: T) joined forces this year with The Chernin Group in a $500 million venture to "acquire, invest in, and launch online video businesses." Dish Network LLC (Nasdaq: DISH) is also planning to launch its own online video service, as are consumer electronics companies Samsung Corp. and Sony Corp. (NYSE: SNE)
In another sign that YouTube may be getting serious about the premium business, however, the company recently began ranking Internet service providers on their ability to provide quality video playback. Like Netflix, YouTube wants consumers to blame ISPs for streaming hiccups rather than the content provider. That issue may become even more important if YouTube can become a successful hybrid service with a significant stable of premium programming. (See YouTube Joins Netflix, Ranks ISPs.)
— Mari Silbey, special to Light Reading