Just to recapitulate our previous article “Is YouTube is heading the Netflix way?” we discussed the probability of YouTube going for a subscription model by the end of this year. But, when YouTube mailed the content owners yesterday asking them to agree to new license terms, everything was crystal clear regarding the future of YouTube.
YouTube is one of the leading pioneers of video sharing website services. For past 10 years, it has been “Free to All” platform where a user can upload video content just by creating a google account.
As of March 2014, the number of people watching YouTube per day is up 40% y/y. This steady increment proved that this platform needs to prioritize its content distribution to the masses in order to create traction in their annual revenue. Hence, YouTube is now on a verge to transform itself to a subscription-based online video platform from October 22, 2015.This transition will be applicable only for the United States of America.
Since FRED – The first YouTube channel to achieve a million subscribers; there are now more than 1500 YouTube channels that boost at least million subscribers and 5000 channels with a million viewership worldwide. Since a beta version of the YouTube Music Key launched last year, subscription launch could be the deciding factor for YouTube’s shift to encash some profit for its search engine giant. For the YouTubers who don’t wish to participate this new initiative, their videos will be unavailable for the public.
How will subscription benefit you?
- YouTube is going ad free. You can surf any video content without an advertisement.
- Users can store videos offline on their mobile devices.
- Creators have to use paywall as it prevents internet users from accessing channel content without a paid subscription.
- Lower-priced subscriptions for specific categories such as kids’ entertainment, toddlers channels etc.
- Expected price could range from $9 to $10.
Till now YouTube’s revenue depended on advertising benefits. But now they can contemplate factors to fuel up their profits. Such as
- Engaging two brands for branded integrations and take the cut
- YouTube has funded hundreds of YouTube channels in order to produce original content.
- Partnerships with brands and T.V moguls to produce new shows. (e.g: Madonna (DanceOn), Shaq (The Comedy Shaq Network), Rainn Wilson (SoulPancake), Ashton Kutcher (Katalyst Thrash Lab)
- Merchandising deals for YouTube celebs for book deals, movie deals, record deals. (Smosh – The movie)
Whereas, Netflix represents a classical Service Business Model, where the users of service and players are the same entity. From disk rental to on-demand Internet streaming media platform; Netflix proved to be the game-changing firm by maintaining “ZERO” advertisements in their online stream. Thus, they are free from needing to appease advertisers to fund their original content.
A Similar business model has is adapted by Showtime, Hulu, Streampix and recently launched HBO NOW. Apart from streaming movies from its 75000+ directory, Netflix also offers T.V soaps such as House of Cards, Orange is the new black, Bloodline, Unbreakable Kimmy Schmidt, Daredevil, The Killing and much more. Netflix charges a basic rate of $7.99/month in U.S.
According to the Canadian broadband provider Sandvine’s biannual internet traffic report, Netflix accounts a staggering 37% of downstream internet traffic in U.S and Canada. Whereas, YouTube generates 15% of the total traffic. (Stats do not include mobile devices)
Next year will be the acid test for these online video streaming giants as by 2018, video on demand, or VOD, is expected to be a $45 billion market. So do tell us which platform you are looking forward to paying. Netflix or YouTube?
Being an artist, movie buff and a media enthusiast, content writing is my career train. I am a proud alumni of Symbiosis Institute of Media Communication (Pune) and currently working for Vidooly.