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According to Michael Learmonth in an explosive piece from Advertising Age online, who obtained insider details by obtaining a look at exclusive documents, more has emerged on Google's foray into the content production world with something new called Youtube Originals. It appears they are executing their long awaited plans to go head-to-head with broadcast and cable television for ad dollars.
Google's foray into content production is not a surprise.... from hiring Robert Kyncl, former vice president for content acquisition at Netflix some clear bells rang on content acquisition, rumours of a Hulu buyout echoed on the web last week, plans for rolling out a Youtube subscription service in the UK, overhauling of the Youtube site itself in order to embrace a more social viewing experience, going 'live' for fresh content as a proposition (in negotiations to stream live NBA and NHL Games), acquisitions of New Networks for it's Youtube Next strategic team and Fflick's sentiment-analysis software, and the NY Post leakage that Google earmarked $100 million for striking content deals with studios and other premium content providers in its quest to expand its offerings in March 2011 are indicative pings.
Hardly surprising. But what is really interesting is how they are going to do it. And that's what Advertising Age has revealed:
- "Dream Makers," a series in partnership with "Big Brother" producer Endemol that would feature Los Angeles Lakers star Kobe Bryant rewarding "outstanding young people" with with the "dream of a lifetime." YouTube is asking marketers for $1.7 million to exclusively sponsor a run of six to eight five-minute episodes.
- "The Incubator," a series from Ben Silverman's Electus featuring 36 short webisodes with 10 entrepreneurs as they turn ideas into businesses. The price tag: $3.5 million for six months of exclusivity.
- And, most ambitious, a live Lady Gaga concert in New York proposed for 2011, streamed on the web through YouTube and Vevo. Price tag to sponsor the one-off event? Nine million dollars for a sponsorship along with Samsung, including a presence on Lady Gaga's YouTube channel and Facebook page.
Youtube recently passed one billion subscriptions online. And with Youtube being one of the most popular TV Apps on Connected TV devices, of which there are going to be over half a billion on the market by 2015, they already have a lead.
In the upcoming years, those hundreds of millions of connected devices will be disrupting the industry by pumping content direct into the living room bypassing the normal value chain of brands/agencies/production companies/broadcasters/audience.
It's more than just a Youtube web play, that's for certain. Aside from the Google TV disaster, Youtube is a standard app on every Connected TV on the market, including Samsung, Sony Bravia, LG Smart TV, Panasonic Viera etc.
More from Learmonth at Advertising Age:
An exec close to the deal said these series are distinct from the "channel" strategy being pursued by former Netflix exec and now YouTube VP-Programming Robert Kyncl. Rather, they are pitched as branded entertainment that wouldn't get the go-ahead without a big-ticket advertiser attached.
YouTube has been in the branded entertainment business for some time, but its involvement in selling the shows and working with Hollywood studios signal new ambition to win major marketing budgets. Indeed the price tags suggest YouTube is seeking higher ad rates than seen typically on TV. Assuming YouTube can deliver a hefty 100 million views to a series for $3.5 million in six months, that's still a cost-per-thousand viewers of $35, higher than a typical TV ad rate of $20, and more in a league with Hulu, which sells TV spots on the web for $40.
YouTube can't be faulted for a lack of ambition. Top YouTube execs like to say they're creating the next generation of cable TV, built and scaled for the web. But instead of 500-odd channels on TV, YouTube is making a play for the "next 10,000," appealing to all sorts of niches and interest groups.
Despite all that, outside executives involved in the talks argue that YouTube still isn't thinking big enough. "I'd rather see them take a more aggressive approach, and get brands involved earlier, rather than re-create the cable model," said one marketing exec involved in the talks.