March 10, 2015
YouTube is facing growing competition from companies such as Snapchat, Facebook and streaming newcomer Vessel for television programming provided by media giants such as Viacom, NBCUniversal and Time Warner. The competition wants to undercut YouTube’s share of big media programming by offering content suppliers more lucrative returns of ad revenue. Despite the offers, some media companies remain hesitant due to the demands of YouTube’s competitors.
According to The Wall Street Journal, YouTube’s challengers “are all promising more generous revenue-sharing deals than YouTube, which lets content creators keep 55 percent of ad revenue.” Facebook, which had previously closed deals with the National Football League and Fox Sports, reportedly offered one company as much as 65 percent of the ad revenue.
Sources also claim that Snapchat and Vessel are willing to offer media companies even more of their ad revenue than Facebook. Vessel, founded by Hulu’s former chief exec Jason Kilar, “is offering media companies about 70 percent of the ad revenue… plus a cut of the $3-a-month subscription fee, if Vessel gets the content exclusively when it is first released,” WSJ reports.
Similarly, Snapchat has reportedly agreed to a 50 to 70 percent offering of ad revenue from its recently launched “Discover” platform, which includes content for networks such as Comedy Central, ESPN and the Food Network. The 50 to 70 percent of ad revenue is contingent upon whether or not Snapchat facilitates the sales transaction of a particular advertisement.
Vessel already had a deal with TBS fall through as a result of its unreasonable request to have TBS restrict clips from Conan O’Brien’s show on YouTube.
Despite YouTube’s unwillingness to offer media companies anything greater than a 55 percent ad-revenue sharing deal, the company has continued to close deals for premium content. At the very least, YouTube serves as a platform for large media companies to promote TV shows and tap into the site’s base of about one billion active monthly users worldwide.
“Virtually every major online video player is in the market for the kind of ‘premium’ programming that traditional entertainment firms create,” notes WSJ.