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Summary:

YouTube’s decision to allow long-form videos on its platform got a lot of people talking, including some bloggers claiming that it was a change in their strategy. (In case you want to know what changing strategy is all about, I can recommend reading this excellent article […]

YouTube’s decision to allow long-form videos on its platform got a lot of people talking, including some bloggers claiming that it was a change in their strategy. (In case you want to know what changing strategy is all about, I can recommend reading this excellent article from Harvard Business Review.) What I found funny about this brouhaha over the new strategy is that it’s a really an old strategy that’s been dusted off for legal content.

Many seem to have forgotten that YouTube used to allow long-form videos on its platform. Sure, most of it was not-so-legal, and consisted of the latest television shows and other copyrighted content. In early 2006, I wrote about being able to find everything from cricket matches to television shows on YouTube. They eventually pulled them down, but only to appease the content owners they wanted to sign up for the YouTube platform.

Of course we all know some of the largest content owners decided to back Hulu, hoping to make it the destination site for premium video content. Hulu’s fortunes are getting better, but YouTube has been no shrinking violet. The site has grown to 82 million unique viewers per month and is as dominant as its parent company Google is in the search business. YouTube is so big that it rivals Microsoft in the search business. What that means is that YouTube has a lot of eyeballs but has had a tough time monetizing the content on its constantly growing site. YouTube isn’t the only online video player having a tough time with monetization. Many people in the online video sales business say that even professional video on sites like Microsoft and Yahoo is proving hard to cash in on, with as much as 50 percent of the inventory going a-begging.

YouTube’s problems are more acute because many of the videos it hosts are really short, which makes the content less useful when it comes to embedding advertising into the videos on the site. So it makes perfect sense for the company to encourage long-form videos on its network. Given that none of the big networks are going to give them their content, YouTube is going after produced episodic content. The long-form video opens up more advertising opportunities for YouTube.

They indicated as much at a special event launching the YouTube Screening Room in Los Angeles today. NewTeeVee has a report. NewTeeVee notes that “YouTube’s been hitting the film festival circuit, talking with directors.”

The strategy is rather similar to the one used by Google’s to popularize AdSense. By partnering with smaller content developers, YouTube is betting that it can aggregate enough traffic to sell to Madison Avenue. At the same time, there is a good chance that some of these small players will grow to become large video players and partners of YouTube. They could easily become a hub for indie movies, smaller and niche television content, and even foreign content, making it tough for startups such as Filmaka and Jaman.

  1. Quote:

    “The long-form video opens up more advertising opportunities for YouTube.”

    I agree on this. However, after reading the piece at HBS review, I wonder:

    1. Can YouTube survive if IPTV takes off completely? Ads in a physcial TV have become a nuisance due to sheer greediness of the distributors.

    2. Consolidation or Merge and Acquisitions (M&A) are not smooth, actually they can be very brutal sometimes, even if there are synergies. Like Quaker Oats took over Snapple (industry being very similar to its Gatorade). But finally sold to Triac for USD 1.5 billion less!

    What kind of consolidation YouTube can think of in its peer industry group?

    Only think they can do is to request Hollywood honchoes or purchase some movie studios or create its own video content. Do you think Google will do that?

    3. Cisco does not shift strategy overnight. They normally own a small stake in the company and if later find it to be valuable, then raise the stake. I do not see Google having the same case here (=acquire step by step). How will Google (hence YouTube) take this up? I do not see YouTube doing that kind of stuff yet.

    4. Finally if the only strategy is to monetize as much as possible, they are left with one option only = create. What additional work they can do in here (I can not think of any other than polishing their tech work, especially on the streaming side)

    Om,

    What will be your take on these?

    Thanks,
    Satya

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  2. And yes,

    Google has been an engineering driven company so far unlike Cisco which more of a M & A driven company. And I do not think Google will take the Satchi and Satchi route of mindless acquistions. (we all know what happened to it)

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  3. Satya, lots of questions. Perhaps this weekend I would get around to answering those. :-)

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  4. Om, you’re right on man, with this point — “They could easily become a hub for indie movies, smaller and niche television content, and even foreign content…”

    When the fragmented Indie supply meets the pent-up mainstream demand, then perhaps the game changes in a very meaningful way. IFC Media Lab has been a pioneer in this space.
    http://medialab.ifc.com

    FYI, I wrote a column about this phenomenon back in March of 2007, and I sense that we’re getting progressively closer to a storytelling renaissance.
    http://dhdeans.blogspot.com/2007/03/sxsw-2007-digital-storytelling.html

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  5. I read the latest artciles showing that the copyright issues it faces with the videos and how Youtomb is handling it.Now with the Longer movies I think the issue will also bigger.

    Youtube
    watch

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  6. This is a good move for youtube as no doubt we will see full tv shows legally on youtube and i think alot of people would want to see them this way

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