CNN reports that the debate regarding whether Google is a media company or tech company — a publisher of content or indexer of content — may soon be over, as the company prepares to morph YouTube into an online “studio system” for a new era of content production. CNN suggests Google is already a media company, but the question should more accurately address what kind of media company; perhaps “one that operates by the economics of the Internet, with no legacy ties to the economics of television, movies, or publishing.”
In recent months, Google has been investing heavily in its YouTube division, including: the hiring of content execs from Netflix and Paramount, recent acquisitions to enhance its current quality of offerings, plans to reportedly spend $100 million on developing new celebrity “channels,” and more. Google hopes to expand YouTube’s dominance in the UGC market to include niche programming and mass entertainment.
Of course, what makes the online video resource unique in terms of serving as a content provider, is that it has very little overhead. As compared to other media companies that are more directly involved in actual production, YouTube’s marginal costs are nearly zero. Advertising revenue is earned the same way whether viewers are clicking on a cute video about someone’s cat — or a professional basketball game (Google is in talks with the NBA and NHL to show live games on YouTube).
YouTube also enjoys the potentially infinite number of specialty channels the Internet provides, an approach that is not practical for cable. It may not matter from day-to-day which channels do well and which do not. As long as YouTube makes the platform available, the content can regularly evolve.
4 Comments
Google makes its bid to become the next BIG media company with a number of significant investments designed to supercharge higher quality content creation. Their offer to fund celebrity channels will put it into direct competition with Hollywood Studios but with a potential advantage of funding content at a much lower cost. At the same time, they will retain their grip on the ability to create niche channels. With their focus strictly on advertising, they win either way.
Google makes its bid to become the next BIG media company with a number of significant investments designed to supercharge higher quality content creation. Their offer to fund celebrity channels will put it into direct competition with Hollywood Studios but with a potential advantage of funding content at a much lower cost. At the same time, they will retain their grip on the ability to create niche channels. With their focus strictly on advertising, they win either way.
I think it will be difficult for YouTube to try to rebrand it self as a place to go for quality content. Low quality UGI content is all consumers think about when they think of YouTube.
I think it will be difficult for YouTube to try to rebrand it self as a place to go for quality content. Low quality UGI content is all consumers think about when they think of YouTube.
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