Back in October, Google announced its plan to spend over $100 million on channels that provide original content as part of “an escalating battle among Internet platforms like Hulu, Netflix and AOL to capture more of television’s advertising dollars,” according to The New York Times.
Some of these channels are now starting up but it is uncertain whether a large enough audience will subscribe — the first requirement in acquiring higher ad revenue.
According to research firm eMarketer, ad spending for online video is expected to increase about 55 percent this year to $3.1 billion. However, that figure represents a fraction of the $60 billion currently spent on television advertising.
“The eventual payoff for the channels is unclear,” explains the article. “YouTube has exclusive rights to the videos for at least a year, and it has not said whether it will continue to finance the channels after those rights expire. (The channel producers own all their content.) A hit channel might bring in enough ad revenue to justify continuing the production, and Google’s standard advertising agreements give content owners a majority share of advertising revenue.”
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