Why YouTube's MGM Deal Doesn't Threaten Hulu

Recent Long-Form Deals Are More Symbolic Than Anything Else

By Published on .

YouTube would like to be a player in long-form video, because viewers seem to like watching TV and film online and because advertisers consider those viewers valuable. Witness the NBC Universal-News Corp. joint venture, Hulu, which has amassed a significant audience for TV on the web but, more importantly, significant ad dollars.

But if YouTube's recent deals with CBS, Lionsgate and now MGM are any indication, Hulu has nothing to worry about. YouTube today announced a deal with MGM for full-length episodes of the reality TV series "American Gladiator," as well as old films such as "Bulletproof Monk" and "Magnificent Seven." MGM is also handing over clips of a more recent film, "Legally Blonde."

Add this to a raft of deals YouTube has forged with the studios of late, including Lionsgate for clips of movies like "Saw" and "Dirty Dancing," and CBS for older shows like "Star Trek" and "MacGyver."

These deals carry little more than symbolic significance for YouTube and the studios involved. YouTube gets to show it can be a responsible steward of precious studio content; the studios and networks get to show they've got a web-distribution strategy and maybe squeeze a few pennies out of series or films that would otherwise be gathering dust. Note that MGM is only giving clips of "Legally Blonde"; presumably MGM is still able to make a buck off that on ad-supported cable.

Unfortunately, the deals YouTube has done so far -- including the indie films featured in "The Screening Room" channel, prove only that producers are willing to throw content up on the site they can't make money from anywhere else. It's a flier on a super-long-tail market for dusty old titles that would otherwise be sitting doing nothing in a vault, and indie films that might be great but aren't getting theatrical distribution. Not a terrible strategy for any of them, but certainly not a game-changer for YouTube.

Hulu is well on its way to establishing a dominant position in TV online. It doesn't yet have many films but the few it does have include several people would want to watch.

YouTube is talking to everyone in Hollywood (save for Viacom, which it currently sees in court), and is reported to be close to deals with Time Warner and Sony. But until YouTube starts doing deals for full-length TV and film, preferably made within the last decade, it is ceding the market -- and the advertising dollars that follow it -- to Hulu. A few marginal deals for old shows and movie clips doesn't change that.

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