Is YouTube the Future of Television?

As people are spending more and more time tucked behind a computer-screen, Paul Spanton asks is YouTube the future of television?
Google Chairman Eric Schmidt made a bold statement when asked whether YouTube could surpass traditional broadcasting. ‘That’s already happened’, he replied. Schmidt has reason to be bold, for one hundred hours of video are uploaded every minute and over six billion hours are watched each month, which equates to almost an hour for every person on Earth.

Despite impressive statistics YouTube has not turned a profit since Google’s $1.6 billion acquisition in 2006. The internet company has diversified into premium content in search of profit, but found stiff competition and reluctant producers in the process. In 2010 the site streamed sixty cricket matches from the Indian Premier League in a move which represented the first worldwide free online broadcast of a major sporting event. Felix Baumgartner’s ‘edge-of-space’ free-fall was watched live by eight million people and his video has since recorded thirty-five million hits. YouTube certainly has the capacity to broadcast original content to millions worldwide.

But all YouTube’s content is original, including the many young people creating programmes attracting audiences comparable with television figures. So, is YouTube the future of television?

To date YouTube has lacked quality content capable of competing with traditional broadcasters. In response communications manager Zayna Aston explained the decision to launch one hundred new channels.‘The idea behind them was to kick-start the creation of original programming specifically for a YouTube audience. What we did was give an advance on future advertising revenue to a number of content providers that we thought were making interesting channels.’ Of those channels the most successful twenty-five now attract over one million viewers weekly.

Yet YouTube has not made serious excursions into the conventional broadcasting market. Professional content is expensive to produce so it has to be amortized (to gradually write off the initial cost) across millions of viewers, and television remains the main outlet. YouTube has moments when it functions as a mass medium, such as Baumgartner’s free-fall, but for most it is a more intimate viewing experience with comparably smaller production budgets.

To that end Google invested $100 million with major media companies to produce professional content. However producers have been reluctant to license their material to YouTube, because they could make more money elsewhere, or they did not trust the internet company.

The main problem for YouTube was highlighted in a 2012 study that estimated visitors spent an average of fifteen minutes a day on the site, compared with four to five hours watching television.

YouTube’s response was to increase its streaming-movie-rental business. License deals were agreed with Warner Bros., Sony, and Universal and the new service went live in 2011, marked by a rare posting from C.E.O Salar Kamangar entitled, ‘Welcome to the future of video. Please stay a while.’ Although more than three thousand titles were for rent at prices similar to iTunes, the same content was available for instant streaming on Netflix, and for a flat monthly fee. The venture was unsuccessful.

The streaming service debuted on Netflix in 2007 offered movies and television programs for about $10 a month. For Robert Kyncl, YouTube’s Head of Business, Netflix ‘brought channel-surfing to the movies’. Netflix offered limitless choice, all on demand, and available on any internet-connected device. It’s stock price soared. Netflix used that money to invest material that has eluded YouTube. In 2013 Netflix spent $100 million on House of Cards, produced by David Fincher (Social Network) and starring Kevin Spacey (American Beauty), a political thriller described as being in the same league as the best shows on television.

Netflix has proved that investment in the right content can attract producers from the traditional broadcasters to online newcomers. As the internet television network has over 44 million members in 41 countries watching more than one billion hours of television shows and movies per month, it is Netflix whose statistics are more impressive, and more likely to surpass traditional broadcasters, not YouTube.