YouTube doubles down on channels

When Google announced its plans to fund some 100 new channels of original programming on YouTube, many expected a transformation in television.

Google had disrupted other industries and TV appeared to be next in line. The YouTube channels were trumpeted as the next iteration in television: Just as a handful of networks begat a few hundred cable channels, YouTube would now foster the birth of thousands of channels online.

The revolution has not yet been YouTubed.

Though a year later such a cultural sea change isn't palpable, YouTube is now doubling down on its investment. It recently expanded into Europe with another 50-plus channels. And now, YouTube is reinvesting in 40 per cent of the channels that have already launched. That means more than half of the channels have failed to catch on, yet is still a rate of success that any network programmer would kill for.

But for YouTube, success at this stage is measured less by view counts than by changing perception.

"What we're trying to do is galvanize the creative and advertising community," Robert Kyncl, YouTube's global head of content and the leader of its channels initiative, said in an interview. "And we're succeeding at that."

Since it was founded in 2005, YouTube has been predominately the home of user-created video. But by putting out a welcome mat to Hollywood, the site is trying to lure viewers to stay for longer and coax advertisers to pair their brands with known talent.

Kyncl says the first year has been one of defining where YouTube's channels fit into the media landscape.

"I feel we're 300 per cent smarter than we were in January," he says.

Have to pay own way

YouTube has declined to make public the size of its investment. The initial channel launch was reportedly fueled by $100 million, a number YouTube executives dispute. Kyncl will go no further than to confirm the $200 million he pledged to spend marketing the channels at YouTube's TV-style upfront presentation to advertisers in May — a flashy event capped by a performance by Jay-Z, who recently launched a lifestyle channel called Life and Times.

Jamie Byrne, director of content strategy, said the second round of funding would be relatively similar to the amount of the first round, on a per channel basis. Those not being offered more money aren't cancelled; they are encouraged to keep going, but will have to pay their own way.

A simple glance at the site reveals how central the channels initiative is to YouTube. The fabric of the video behemoth — where 72 hours of video are uploaded every minute — has been reoriented to emphasize a user's playlist of channels, a move that has increased channel subscribers by 50 per cent, executives say. It may sound like a small tweak, but behind it is the mission to alter the very nature of YouTube.

"Up until now, the primary noun on YouTube has been video. You watch a video, you share a video, a video has view counts and so on," Shishir Mehrotra, director of product management at YouTube, said in a separate interview. "We're gradually shifting the site so the primary noun on the site is the channel, and you tune into the channels that you care about."

Sometimes lost in the fanfare over YouTube's channels initiative is that it's only a drop in the bucket for all of YouTube's channels. Through ad revenue sharing, more than 1 million content creators are earning money through YouTube, from pennies to hundreds of thousands of dollars.

Upstart production outfits

The channels that have received funding from YouTube aren't separated from the tens of millions created sans financial backing by users, upstart production outfits and large media companies. Those funded by YouTube are just seedlings in endless pastures of video, planted with the hope of spouting more.

The first harvest, though, has not impressed some onlookers. Forrester analyst James McQuivey, who specializes in digital video and was among those who predicted YouTube's channels would be a landmark shift, has not seen the progress he expected. He would like to see YouTube try to produce some mainstream originals, as Netflix and Hulu have, in order to attract mass audiences, not just niche ones.

"If the requirement for showing progress for Google is that they've disrupted television, then they haven't met that condition," says McQuivey. "They haven't really changed the way people watch TV. That said, to have expected to do that in a year would have been kind of crazy.

"I see nothing in what's happened so far that says, 'Yep, Google has definitely sewn this up. Two, three years out, they will have changed the future of television,"' he says. "I think they've laid the groundwork from which they had learned how to do this, but it's going to require significant investment."

Perhaps the closest a YouTube channel has come to a mainstream viewing event was Red Bull's October 14 webcast of daredevil Felix Baumgartner's free-fall jump from space. Some 52 million watched the channel's live stream, a viewership that far outpaced the 7.6 million who watched it on the Discovery Channel in the U.S.

'Comedy Shaq'

Such breakthroughs have been seldom, though. Most programming has been more of the talk show variety. Rainn Wilson gets metaphysical on his channel "Soul Pancake." Amy Poehler gives young women a role model with "Smart Girls." Shaquille O'Neal flexes a new muscle with "Comedy Shaq." Others have sought the drama of a scripted serial, like the Bryan Singer-produced sci-fi series "H+" or the female-focused "WIGS" channels from Rodrigo Garcia ("In Treatment") and Jon Avnet ("Fried Green Tomatoes").

The most popular few channels typically draw 5-10 million viewers weekly. Among the usual chart-toppers are Warner Sound, which features music videos and behind-the-scenes features on the label's acts, WWE Fan Nation, Maker Studios (a sprawling digital network of hundreds of channels), and the gaming channel Machinima Prime.

Most channels, though, receive less than 100,000 views per week and some draw just a few thousand.

Kyncl describes this stage as gear three of a five-shift process. The next iteration, he promises, "will be reserved for partners who by then are big, successful and growing fast" and will take them to "the next level." The message to content brands is clear: Get on board now, or you'll miss out.

One advance in the YouTube viewing experience has been the launch of skippable ads, which now run on about 65 per cent of videos. Mehrotra says this is more palatable to both viewers and advertisers, who only pay for ads that are watched.

'Creator spaces'

"TV has generally made more money by showing more and more advertising," says Mehrotra. "Our view is that we should actually show you fewer ads but make sure the ads are actually being seen."

Drawing a distinction — not a commonality — between YouTube and TV has become part of the mission statement. And it's helping the amateurs catch up with the pros, handing out instruction manuals and conducting seminars, meet-ups and training programs and opening "creator spaces" — studios with available filmmaking equipment — in London and New York, with another coming this month to Los Angeles.

"The strategy is set," says Kyncl. "We are combining the worlds of content creation and we're tearing down the walls that existed before. It's not easy but I would say we're doing a pretty good job at it."

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