YouTube's Video Views Are Falling -- By Design

Clicks Are Out, Engagement Is In as Video Service Goes Longer-Format to Conquer the Couch

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Source: ComScore

YouTube is getting smaller in a metric that used to mean everything: views.

Since December, views on YouTube have dropped 28%, and March views are only slightly above what they were a year ago, startling for a site accustomed to breakneck growth.

It's an intended consequence of the Google-owned site's shift from a video search engine filled with snack-size content to a full-fledged, couch-potato-optimized entertainment destination. At YouTube, the "view" is out and "engagement" is in.

After investing $100 million to create content channels, YouTube's focus has shifted from directing viewers to videos of skateboarding dogs to enticing them into longer, more engaging videos—the kind that are, not incidentally, more appealing to advertisers.

On March 15, YouTube altered its recommendation system to make the time spent with a video or channel a stronger indicator than a click in determining which videos to surface to a user.

"Our goal is we want users to watch more and click less," said Cristos Goodrow, a former Google search executive who joined YouTube as director of engineering a year ago. "This is better for users because it takes less clicking to get to the video you want to watch."

Like Google, YouTube is an empire built on clicks, and it has used them above all else as a proxy for popularity and -- in a sense -- quality. Over the years the site has gotten very good at using data about which videos were getting clicks, or views, to serve up recommendations and get users to click on another video.

Before the change, YouTube would track the length of views up to 30 seconds, primarily to make sure each click led to an actual view. Now it's tracking across longer timeframes to see if viewers watched two or three minutes of content.

It appears to be working. While views have dropped of late, the amount of minutes users spend watching YouTube has grown over the past year by 57% to more than 61 billion minutes in March 2012, according to ComScore. The average length of a video view has grown a full minute to four minutes in the past year. That's still a far cry from Hulu, which primarily shows network TV and has an average of 8.5 minutes per view.

There's a business reason at play. Longer viewing means more opportunity to show viewers ads, either through strings of videos that play automatically with ads in between or longer videos with TV-like breaks. And engaged viewers are also thought to be in a more receptive mind-set for brand advertising, the biggest tranche of ad dollars untapped by YouTube.

Brand advertisers are more concerned with notions such as engagement than they are by traditional web-based direct-response metrics such as clicks, said Eli Goodman, media evangelist at ComScore. "The effectiveness of advertising is enhanced when someone is in an engaged state."

YouTube is also experimenting with more technology to decide when to show a user a video ad. Previously, that had been about once every seven minutes. Now, YouTube is using hundreds of variables to determine whether or not a viewer is engaged with a channel and likely to stick with it.

This, too, caused a bit of hand-wringing because it meant some YouTube users deemed not fully engaged wouldn't see any ads at all. "There were some internal struggles; some people were concerned that there were people we were never going to show ads to," said YouTube group product manager Phil Farhi. Google sites, including YouTube, showed an average of 17 video ads to viewers in March, compared with more than 50 shown by Hulu to its users.

YouTube also tracks what happens after an ad is shown. Did the viewer click away? If so, YouTube will try a different approach.

The move toward more time spent with videos also serves YouTube's migration beyond the PC. YouTube introduced a lean-back interface for more passive viewing nearly two years ago and has been busy trying to get its channel guide standardized on all apps and devices that carry YouTube, such as tablets, smart TVs and set-tops such as TiVo. YouTube is available as an app on 350 million non-PC devices, including iPhones, Xboxes and Samsung smart TVs.

The tweaks to Google's algorithms are intended to influence creators as well, some of whom have become very good at getting the next click with racy keywords and deceptive thumbnail images. After all, views used to come with bragging rights in web video. Now the goal is to reward partners that generate engagement through more time spent watching videos.

One big YouTube "partner," gaming video-entertainment network Machinima, says the tweaks are helping. "YouTube is trying to deliver a better user experience by implementing a more sophisticated and intelligent recommendation engine, which is rewarding videos that drive better engagement and longer time spent," said Allen DeBevoise, CEO of Machinima. Machinima users watch an average of 69 minutes of content a month, largely of video-game demos, though Machinima is planning a live-action series for the fall, "Halo 4: Forward Unto Dawn."

"It's not just about a single video," Mr. Rajamaran said. "As a channel partner you are trying to drive engagement; now our system rewards that as well."

Added Mr. Goodrow: "We had to make this change. If we are connecting viewers with the best content, the way we were doing it wasn't going to work out."

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