Damian Blackden gives some context on the implications of YouTube Red, as part of our Change Briefing series.
Rumours of a YouTube subscription service that would offer ad-free content have been circulating for some time.
Google finally broke cover on Wednesday with the launch of YouTube Red, which charges consumers $9.99 per month ($12.99 to iOS users) for access to its entire content without seeing ads.
YouTube has therefore become a direct competitor to Netflix, Hulu and other paid for streaming services such as Amazon Prime.
What The Change Means:
YouTube has over 1 billion users. Only a relatively small proportion of that number will most probably pay to avoid ads. And in fact this latest move by Google will allow us to see just how annoying those YouTube pre-roll ads are, as the number of subscribers could be used as a form of measurement.
However adoption rates could climb beyond minor levels if content providers systematically push more compelling material on to the YouTube Red platform, and we could see some re-negotiation regarding revenue share between content distributors and owners as the marketplace dynamics shift.
But You Tube Red is also interesting for a wholly different reason. It’s an opportunity for Google to further develop its billing relationship with many consumers, having previously only charged a few individuals for Play and high levels of storage. Having transactional relationships at the highest scale remains an advantage enjoyed by Apple, Amazon and telcos such as AOL’s owner Verizon.
Implications Of The Change For Advertisers:
This latest move is unlikely to affect potential advertising reach in the short or medium term, so advertising schedules will be unaffected.
However the concept of Google further increasing its invoicing relationship with consumers is significant, especially as the battle to own the mobile wallet heats up in the coming 24 months ‘ and we will watch developments closely.