The dominant site looking to expand
The powerhouse that is YouTube has fast become the top video sharing website and deemed the world’s second largest search engine. Since its takeover by Google in a deal worth £883m, YouTube is close to achieving revenue of $1 billion a year and now looking towards cable in order to tackle the TV industry head on.
As Google looks to expand and invest, YouTube chief Salar Kamangar has implied paidsubscriptions Is a thing of the future with small companies implying their interest and willingness to aid in doing so. YouTube already has had a movie rental service in place since October 2011 with thousands of blockbuster movies available to rent although this does not seem to have had an impact on other rental companies within the market.
Google is one of many companies who have been forced to consider a variety of measures in case of any breakdowns of operations in hindsight of the economic climate. Otherwise known as keeping all the eggs in one basket concept, if the basket falls, everything will be destroyed and thus the eggs need to be spread out to ensure protection.
The YouTube subscription service is likely to give cable a run for its money because of the following:
- Millions of people are already familiar with the way in which YouTube operates and thus will be comfortable running and navigating the interface on the TV – people do not like change
- YouTube has a great reputation for consistency and quality of videos and thus will remain as the first choice for thousands
- The increase in subscription providers has expanded the market size and leaves a wide open gap for YouTube to take a slice
A viable option?
It has been pointed out that there is a large potential for subscriptions although it is debated whether Google has the economics on its side to compete with the like of other well established businesses. Companies such as Microsoft have used their popular gaming system, the XBOX 360, as a platform for TV offering a variety of video content and working with manufacturers to create an integrated video approach.
However the reason for YouTube’s recent success has been down to consistent research and development. Working alongside the likes of Hollywood has enabled the business to produce some original content for an audience of millions and thus lead to a variety of great accomplishments over the last few years. This has included the licensing of formal agreements between the creators of popular video content which has increased the number of quality footage released on a daily basis. Over 13 hours of video are uploaded to YouTube every minute so it appears that the internet still remains the most effective and accessible form of communication. Thus moving forward with such a successful business model suggests the future is bright for YouYube.
Google TV makes an early appearance
Google TV is already shifting thousands of consoles across American and in the UK with rumours suggesting it is set to rival the likes of Comcast. The device runs on HD televisions and allows the user to browse the internet, play games and run videos straight from YouTube. It has many capabilities similar to a smartphone but on a much larger and sophisticated scale. Having been set up before XBOX 360 TV integration was announced, modifications to the system have become a necessity to avoid losing customers. Towards the end of last year Google released an important update for Google TV which saw a new interface and a greater variety of applications being set onto the system.
The system has been selling reasonably well across American and Britain but not taken a large percentage of the market share. As such Google has sought to deal with this by the means of drastic updates and technological improvements. Integration between the TV and YouTube has been undertaken amid speculation that paid subscriptions are going to be present within the console and online as of next year.
Cable has definitely got a head start with an existing user base of millions although it uses devices created for hundreds of channel, not thousands or even millions. Much research will need to be carried out in the cable industry in order for technological hurdles to be overcome but in doing so will make cable remain a highly competitive sector. Despite this the internet giant YouTube is likely to capture a large sector of the cable market by building upon its previous and successful experience. With paid subscriptions on the horizon, the company is expected to receive a dramatic boost in revenue and is a clever move to ensure future stability in the uncertain economic climate.