YouTube is getting ready to provide all users with the Prestige line of original series and movies for free. YouTube uses its traditional ad-supported system to attract more viewers.
The company plans to withdraw its ad-supported programs by 2020 and limit the number of original series and films it orders, such as The Hollywood Reporter . Ordered series, including some with Hollywood star talent, are available to all YouTube users for free, whether or not they sign up for YouTube Premium. In the past, pilot episodes could be viewed for free, but users had to pay a monthly fee of $ 1
Robert Kyncl, chief business officer of YouTube, told The Hollywood Reporter that the company has learned through experimentation that "many projects work incredibly well" when provided free of charge through ad-funded ads networks. This is a different approach than what the YouTube team originally wanted.
"If you look at our originals in the last few years, our main goal was to get the YouTube Premium subscribers," Kyncl said.
A fork in the road
This original approach did not work so hoped the company. Although YouTube has not published the exact number of subscribers to YouTube Premium (formerly YouTube Red), the company allegedly registered only 1.5 million subscribers in 2016. The paid subscription did not hold the promise of a more prestigious, exclusive program for users. The shows were limited, they did not receive much critical feedback, and most important, it seemed that the YouTube team had difficulty turning people who were used to a free platform into paid content.
All these elements led YouTube to a fork in the road: it could aggressively track the original series and hope for more subscribers, or it could go back. Instead, YouTube has found an alternative. The company invested hundreds of millions of dollars in the extension of YouTube Premium (then Red) and collaborated with celebrities such as Kevin Hart and Ellen DeGeneres for original series. Although the paywall still existed, YouTube investigated that many of these series were released for free to all YouTube users. The new series relied heavily on ad support and sponsorship. The concept was simple: big names will attract big advertisers, and that means more money in the pocket of YouTube.
As a result, subscriptions lost importance as YouTube expanded its ad-supported network of original series. Other companies who work with YouTube have also noticed. One manager told Digiday that YouTube Red subscriptions accounted for "less than one percent" of major channel revenue.
A manager on a network that receives more than a billion views a month on YouTube said that 2017 YouTube Red's subscription revenue represented about 7 percent of the network's revenue from "YouTube-monetized" networking , "That's exactly what monetizes and YouTube makes [the ads and sponsorships] we sell," he said. "If you add what we sell, it will be less than one percent."
YouTube continued to expand its library, relying heavily on advertising support from reputable companies such as Johnson & Johnson, who signed up for a Ryan Seacrest team. LED Show Nobody, not even YouTube, could agree on what YouTube Red was, especially in a sea of fast-growing original content from Netflix, Amazon and Hulu. The company showed no signs of slowing down, and there was a competitive pressure, according to an article by Bloomberg . More shows were added, more celebrities were hunted and more advertisements were secured.
Considering how much YouTube appeared in the original series back then, news of the company's decision to back down may seem out of nowhere, but executives like CEO Susan Wojcicki have long hinted at this direction.
Then Wojcicki made headlines in February after telling Kara Swisher of Recode that YouTube Premium was a music service. It was the first time that a YouTube leader specifically named the subscription platform as a music service and, through its partnership with Vevo, focused on the platform's video library.
"Our goal is to be a large, leading video platform that contains a wide variety of content," Wojcicki told Swisher. "There are all these categories, for which no one really offers a solution, and we can breed best there. Shows and movies are a very competitive space. It has to be paid economically with a subscription service.
When asked if YouTube would be interested in developing a series that could compete against a prestigious original show by Netflix or Hulu in the same way as [HouseofCards . Wojcicki gave another insightful response to the company's plans.
"We could, but I'm not sure if this could be what we're trying to do on YouTube," she said.
This was a strong 180-degree turning point away from the company's plans two years ago. Susanne Daniels, the former head of MTV's original content, YouTube Premium, told reporters in 2016 exactly the opposite.
"YouTube has everything to do with original content," Daniels said. "We want to open Hollywood's Rolodex and introduce our creators to visionary directors, writers and producers."
It's a short time for a massive turnaround. There are a few things that can help explain the reluctance of YouTube to search for more original series, especially for individual creators who find big fans on YouTube.
Part of YouTube's original-series plan was to attract larger advertisers, but in the wake of controversy – including disturbing child content, disinformation, conspiracy theories, and terrorist content displayed on the platform – companies were reluctant to display ads on YouTube videos. YouTube could not promise security, and that was a big concern for advertisers.
Then YouTube came up with problems with individual creators. Felix "PewDiePie" Kjellberg lost his original series Scare PewDiePie in February 2017, after controversy over anti-Semitic jokes and images that appeared in his videos. The original film by Logan Paul The Thi and ning: New World Order was discontinued after filing a body in the Aokigahara forest in Japan earlier this year. (Paul's film was published straight away last month.) Both creators worked with YouTube on the projects, earning first-rate Google Preferred advertising revenue. The company was facing big problems. Suddenly, the top stars became controversial, and the advertisers did not want their ads to appear in the videos or sponsor those creators.
YouTube executives may have launched YouTube Red with the intent to be a true Netflix competitor and improve their original talent, but suddenly it became too risky for a bet. The subscribers were not really subscribed, the advertisers were worried about the platform and the creators were no longer reliable. So YouTube turned to a safer bet that could be extended to music and celebrities.
If this trajectory is familiar, it's because it's the same MTV has defined for years.
The future of YouTube Premium is unclear, but one thing is certain: it does not rely on subscriptions. Instead, the company is returning to its roots and investing in Star Power. Ads are shown in front of videos and everything is free. However, celebrities are hired to maintain the placement of big company advertising placements in large dollars. That's why Victoria Beckham has a YouTube channel alongside Will Smith and Ellen DeGeneres.
Now YouTube Premium is no longer useful for users. Apart from offline music playback and ad-free viewing, subscribers can not benefit much. But that does not matter to the company. YouTube is not interested in subscriptions – advertisements and celebrity channels. As more celebrities join the platform to both enhance the industry's credibility and secure better advertising, YouTube's landscape will change.
What was once a potential buy for those who may have been interested in the original content of YouTube, which hid behind a membership subscription, suddenly seems like an inexplicable purchase.