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YouTube is doubling down on original content in a plan to ambitiously expand its programming and attract audiences and advertisers.
The company is set to produce six original series for its free site and is also ramping up content investments for its subscription service YouTube Red.
In total, YouTube aims to pour hundreds of million of dollars into more than 40 original shows and films over the next year, Bloomberg reports.
YouTube is building its business to capitalize on both models for monetizing digital video — ad-supported and subscription. Monetizing user-uploaded videos with ads has been YouTube's bread and butter, and now many other video-centric social platforms such as Facebook and Snapchat are following suit. One of the big trends playing out across these platforms is the push to create high-quality video in a bid to scoop ad spend from traditional TV. And by creating TV-like content, YouTube is tackling one of the big, recent challenges to its business — advertisers' concerns around "brand safety," or the risk that their ads will appear alongside unsavory content.
Original content helps preserve the value of YouTube's advertising-based model. By selling inventory around its original programming, YouTube can assure advertisers that their campaigns will run in a trustworthy environment, next to high-quality shows. In return, YouTube can demand bigger commitments from its advertising clients, raising its ad prices to a rate comparable with traditional TV. Johnson & Johnson has already signed on as the sponsor of a forthcoming YouTube show from Ryan Seacrest.
YouTube is also committing more resources to develop content on its ad-free, $9.99-a-month Red tier. Production budgets for Red are said to be on par with those at HBO and Showtime, following reports that YouTube has spoken with partners about creating shows that cost between $3 million to $6 million per hour. Last year, YouTube funded close to 30 programs for Red. By embarking on an original content strategy here, YouTube charted a similar path as its rivals, like Netflix, Amazon Video, and Hulu.
The Alphabet-owned company is also enlisting marquee talent for this original programming endeavor. Aside from Ryan Seacrest, Ellen DeGeneres, Kevin Hart, and Demi Lovato are some of the big names that will be behind new original shows. YouTube’s homegrown stars will also inevitably feature heavily in upcoming programming. Diversifying its talent roster with big celebrities, social media influencers, and homegrown stars will make YouTube’s original content appealing to broad audiences.
Over the last few years, there’s been much talk about the “death of TV.” However, television is not dying so much as it's evolving: extending beyond the traditional television screen and broadening to include programming from new sources accessed in new ways.
It's strikingly evident that more consumers are shifting their media time away from live TV, while opting for services that allow them to watch what they want, when they want. Indeed, we are seeing a migration toward original digital video such as YouTube Originals, SVOD services such as Netflix, and live streaming on social platforms.
However, not all is lost for legacy media companies. Amid this rapidly shifting TV landscape, traditional media companies are making moves across a number of different fronts — trying out new distribution channels, creating new types of programming aimed at a mobile-first audience, and partnering with innovate digital media companies. In addition, cable providers have begun offering alternatives for consumers who may no longer be willing to pay for a full TV package.
Dylan Mortensen, senior research analyst for BI Intelligence, has compiled a detailed report on the future of TV that looks at how TV viewer, subscriber, and advertising trends are shifting, and where and what audiences are watching as they turn away from traditional TV.
Here are some key points from the report:
Increased competition from digital services like Netflix and Hulu as well as new hardware to access content are shifting consumers' attention away from live TV programming.
Across the board, the numbers for live TV are bad. US adults are watching traditional TV on average 18 minutes fewer per day versus two years ago, a drop of 6%. In keeping with this, cable subscriptions are down, and TV ad revenue is stagnant.
People are consuming more media content than ever before, but how they're doing so is changing. Half of US TV households now subscribe to SVOD services, like Netflix, Amazon, and Hulu, and viewing of original digital video content is on the rise.
Legacy TV companies are recognizing these shifts and beginning to pivot their business models to keep pace with the changes. They are launching branded apps and sites to move their programming beyond the TV glass, distributing on social platforms to reach massive, young audiences, and forming partnerships with digital media brands to create new content.
The TV ad industry is also taking a cue from digital. Programmatic TV ad buying represented just 4% (or $2.5 billion) of US TV ad budgets in 2015 but is expected to grow to 17% ($10 billion) by 2019. Meanwhile, networks are also developing branded TV content, similar to publishers' push into sponsored content.
In full, the report:
Outlines the shift in consumer viewing habits, specifically the younger generation.
Explores the rise of subscription streaming services and the importance of original digital video content.
Breaks down ways in which legacy media companies are shifting their content and advertising strategies.
And Discusses new technology that will more effectively measure audiences across screens and platforms.
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