YouTube Red: Don't Compare Us to Netflix

New Subscriber Service Says Content, Talent Makes It an Entirely New Player

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YouTube's stable of talent is what sets it apart from the ever-increasing number of video services.
YouTube's stable of talent is what sets it apart from the ever-increasing number of video services. Credit: Comp by Ad Age

Now that YouTube has unveiled its paid subscription service, YouTube Red, it seems logical to think of it as a competitor to Netflix. YouTube prefers that you don't.

"Our membership service is completely different from what Netflix is," Robert Kyncl, who oversees all business functions for YouTube, told reporters at an event on Wednesday. "Every step that we have taken along the way is 180 completely the opposite of what Netflix is doing."

One obvious difference is the content that Netflix and YouTube are paying to make. YouTube announced a range of new shows and movies. All of them feature entertainers who became prominent on YouTube itself (although many are being bolstered behind the scenes by production companies not directly associated with the platform.) This means that YouTube original shows are aimed at the young people who make up the majority of the audiences for such performers as PewDiePie and the Fine Brothers. Netflix's most popular original shows have essentially looked to pull adults away from their HBO subscriptions.

YouTube's stable of talent is what sets it apart from the ever-increasing number of competing video services. The general public -- at least the general public's kids -- know what it means to be a YouTube creator. There's no such thing as a Vessel creator or a Netflix creator, or even a Facebook video creator. YouTube pushed that point home in describing how its music service, which is part of Red, is unique: User-generated remixes and tribute songs proliferate on the platform.

YouTube is going to look much less like TV in other ways. The original shows won't all fit into the standard 22-minute or 44-minute windows to which programs intended to eventually make it onto broadcast have to conform. Some new programs will be as short as six minutes. YouTube executives declined to provide specifics as to when shows produced for YouTube Red might be available on other platforms. But they are producing some programs at standard broadcast lengths.

Kyncl also pitched YouTube Red as a service for tools that heavy YouTube users have been asking for, such as offline playing and the ability to run YouTube videos in the background of a mobile device. Not least, the current hysteria around ad blockers for mobile devices has shown that many consumers are willing to pay to get rid of advertisements.

It is widely recognized that the biggest draw for a subscription service is content that you can't get elsewhere, and the people who are going to want YouTube's content are probably teenagers. The focus on young people provides YouTube with a specific challenge because older, more affluent consumers are the ones most likely to pay $10 a month for digital media subscriptions. Kyncl acknowledged that YouTube mulled this issue while developing the service. "We're starting with that, and every subscription service goes through an evolution process," he said.

Should YouTube opt to compete more directly with Netflix, it would have one of the main ingredients needed to replicate the other company's original programming strategy: the resources to pay premium production companies to make original shows. At the same time, it has something Netflix would probably find almost impossible to replicate: millions of young people willing to post free content in the hope of getting famous, or because that's what young people do.

Richard Raddon, founder and chief executive officer of Zefr, a company that helps advertisers target video ads, says this could give YouTube flexibility as the playing field for online video shifts. "It would be easier for YouTube to become Netflix," he said, "than for Netflix to become YouTube."

~~Bloomberg News

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