News

POV: YouTube Red

Mindshare Point of View

Background
YouTube Red is a new subscription based service which launched in the US on October 28th. Users can now pay $9.99 a month to watch videos ad-free, save videos to watch offline on their device, and play videos in the background (most applicable to music videos). With the promise of original series, movies, and integration to the upcoming YouTube Music app, there’s plenty of speculation over the direction YouTube is headed. With a billion+ monthly active users gained over a decade of free access, the value of YouTube Red is being hotly debated.

Details and Implications
While only currently available in the US, YouTube Red is expected to expand internationally soon. YouTube is offering a free monthly trial of the service, and also bundles the cost with Google Play Music (a subscription to one includes the other).

Nearly all channels have agreed to YouTube’s new terms, representing 99% of watch time. This agreement means that publishers, brands and creators will allow their content to be seen on both the free and subscription based models.

For channels owning their content and its distribution, this isn’t an issue. However, ESPN has made headlines for being unable to participate due to distribution contacts which forbid them from putting content behind a subscription-based wall. At the present time, ESPN has shut down 11 of their 13 YouTube channels.

ESPN may be a rarity, as YouTube insists its business as usual for the majority of channels. For brands concerned about the new ad-free option, they don’t anticipate significant changes to come. There should be no shortage of scalability across popular ad products, or major impact to Google Preferred inventory.

It’s easy to understand why the value of YouTube Red fails to compare to other subscription based video services like Netflix, Hulu or Amazon Prime. Even with plans to expand into original series in 2016, the scale of exclusive programming (which they plan to eventually distribute for free with ads) pales in comparison to the amount of content generated throughout the platform’s free economy.

Summary/ POV
YouTube is loved, particularly by millennials, for its authenticity and accessibility. Polished content and walled gardens will not bring a wave of paid subscribers – especially with an array of other services available, arguably offering an equivalent or superior service for less. It is likely that there will be many iterations and updates to YouTube Red over the next few months, as they search for the secret to making this new model a success.