Google Inc. plans to create 20 special channels on its YouTube video website, and will spend $100 million to create original programming to populate them, according to the Wall Street Journal.
Like Netflix announced last month, Google wants to create its own streaming video programs, however, according to the WSJ sources, the company will create low-cost programming designed specifically for the web and YouTube, and support the shows with advertising.
With YouTube, Google Inc. is looking to compete with broadcast and cable television, a goal that requires it to entice users to stay on the website longer, and to convince advertisers that it will reach desirable consumers. The service wouldn’t be available until later this year or early in 2012, one of the sources said.
YouTube intends to offer channels tailored to music, TV, arts, and sports, along with a celebrity site, each with more than 10 hours of professionally programmed original material a week, one of the people said. Plans call for 20 channels funded with $5 million each for programming, a separate person said.
“The pending changes are a big bet by the world’s most-popular video site to push in a new direction,” writes Jessica Vascellaro. “Between the Wild West of user-generated content and the pricier precincts of full-blown TV shows, Google is hoping to carve out a niche of original, professionally produced Web videos that it hopes will cultivate loyal viewers.”
It was unclear when Google would begin spending the money to create the new programs, but the source said that Google has visited top Hollywood talent agencies and music producers in search of ideas, and will probably end up making deals with production companies and directors to produce the content.
YouTube’s move comes as streaming video services are growing stronger, upending the way people watch TV shows. Amazon.com Inc. and Hulu LLC are making similar efforts. For example, Netflix Inc. is building up a cache of TV content and movies, recently securing rights to stream the hit series “Mad Men.”
“Good move, Google,” writes Mashable’s Charlie White. “The direction broadcast television is taking is beginning to look obvious, where web-connected screens are finding their way into the living room and home theater in ever-increasing numbers.”
He continued: “In addition to a plethora of set top boxes, many new TV sets are equipped with Internet connections, and Google’s own Google TV hardware is starting to make sense in light of this latest initiative.”
Google bought YouTube for $1.6 billion in 2006 and eventually faced pressure to turn it into a profitable business. YouTube went on the hunt for feature content, like TV and movies, expecting such content would make it easier to sell ads.
From the beginning, YouTube also featured plenty of professional entertainment content, but it was often posted without the owners’ consent. The site has so far remained unwilling to pay licensing fees and eventually implemented a filtering system in response to complaints from content owners.
Now, Google try to investing in creating its own Tv show and rather than spending huge sums to license it. It’s aiming to create a network of ad-supported channels that users tune into and spend more time with. YouTube executives say they want people to “watch YouTube” the same way they “watch TV.”
YouTube is now the world’s No. 3 website in terms of unique monthly visitors and last year generated about $544 million in net revenue, or the site’s take after payouts to content creators with which it shares ad revenue, according to estimates from Citigroup analyst Mark Mahaney.
The site is expected to generate more than $800 million in net revenue this year. Revenue is growing on both user-generated content and popular made-for-Web Tv shows. YouTube contributors can already upload their content to channels, but some argue they are difficult to find on the current site. [via Mashable, Bloomberg and Wall Street Journal]