Vessel starts invite-only beta of its early-access video service

4 Comments

Credit: Vessel

Former Hulu CEO Jason Kilar wants you to test his new video subscription service Vessel — if you don’t do it all at the same time, that is: Vessel launched a closed beta test of its service Wednesday, inviting some of the people who have signed up for early access on Vessel’s site ever since Kilar first shed light on the service last month to try it on iOS and the web.

Vessel wants to invite more users in the coming weeks, and could completely open up as early as March. An Android app is expected to launch soon as well, and eventually, the service is going to also target smart TVs and connected devices.

I had a chance to take a sneak peek at Vessel’s slick-looking iPhone and iPad apps earlier this week, and Kilar pitched Vessel to me as an early access window to some of the web’s most popular video content. The idea behind the service is that consumers pay $2.99 per month in order to get videos three days before they appear elsewhere for free.

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Kilar and his team, which includes a number of fellow ex-Hulu employees, were able to sign up YouTube stars like Shane Dawson, Ingrid Nielsen, Marcus Butler and Rhett & Link, as well as online media brands like Nerdist Industries, Tastemade and Machinima. Vessel is also getting music videos from Vevo as well as directly from some of the labels, and some short-form content from traditional TV networks like A&E.

Some of that content is exclusive to paying Vessel subscribers for 72 hours. Other videos will remain behind the pay wall for longer — the decision is up to each and every publisher — and some, like Vevo’s music videos, are available for free to everyone.

Kilar was a big proponent of ad-supported video services while at Hulu, and he told me this week that he is still very bullish about the free, ad-supported web. But just like Hulu, Vessel is also mixing ads with subscriptions. Users can access some content for free, but have to start paying if they want early access. And paying users get first dibs on a lot of content, but they’ll also get to see ads.

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However, Vessel wants to be smarter about advertising. Kilar told me that there will be “no banners or skyscrapers.” The service is instead introducing two fairly unobstrusive ad units: A visual ad that appears between videos in Vessel’s equivalent of the news feed, and a preroll video ad that is just five seconds long. Right now, advertisers on Vessel’s platform include major brands like KFC, Jaguar, Geico and Doritos.

Publishers will get 70 percent of their video’s ad revenue, and 60 percent of Vessel’s subscription revenue. Kilar estimated that this will result in $50 or more per thousand videos viewed, whereas he said that publishers “on the free web” make an average of $2.20 per thousand views.

Of course, even these high ad rates only matter if Vessel attracts a sizeable audience. Kilar insisted that Vessel isn’t trying to compete with any one platform, but rather add another revenue stream for creators, but creators and consumers alike will obviously compare the service to YouTube. Google’s video service may have lower ad rates, but also a gigantic audience, with one billion users visiting the service every month.

For Vessel to compete with that, it will have to grow a sizeable audience of its own. Kilar seemed confident that the company will be able to do that, telling me that Vessel would be capable of amassing “millions and millions” of subscribers over time. I’m honestly not sure if that many people care about getting their web videos three days before everyone else, especially if they have been trained to watch them for free for years, but Kilar seemed undeterred. “Early access is valuable,” he told me.

4 Comments

TimeKeeper

For the 60% subscription rev share, how are they going to divide that up to providers? Will a provider’s cut of the 60% be based on:

their proportion of entire audience views they get each month,
a function of the number of titles they offer in the library,
a straight cut (10 providers, each gets 10%, 100 providers, each gets 1%, etc…)

I’m trying to work the numbers to arrive at the $50 CPM number you published and just can’t get there. I can understand the 70:30 split of ads as you can directly attribute a pre-roll to a piece of content. I am still questioning how much a 5 second ad would pay, but I can understand the flow of money.

Splitting the subscription revenue is different. As it reads, each provider will be getting 60% of the subscription revenue which doesn’t work mathematically. The 1st provider can get 60% but the second provider cannot get 60% as well. Depending on how it is divided up, there is a disincentive to add more providers/content as the slice of the pie gets smaller. this makes achieving the $50 CPM harder and harder.

TimeKeeper

Should call this service “Spoiler”. Only a select few people will be talking about a show around the “water cooler” 3 days before it airs.

Jeremy J. Campbell

Early content access for a fee won’t work I don’t think but we will see. I won’t pay it and don’t think others will either, but it’s a potential profitable premise worth testing. And success doesn’t always breed success so Jason has a lot of work ahead! He seems pretty confident, maybe even a bit cocky which may work in his favor. Vessel could be huge or out of business in 3 years!

Thanks for this info Janko, I love hearing about new products and services, especially in the video space.

Shelley

WOW That’s kind of negative thinking!! I WILL sign up for the early access!! I have complete faith in Jason and his team!! His track record is pretty good How’s yours?

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