YouTube's Dominance of Online Motion Pictures: Will It Last? And What Does YouTube's (Google's) Current Lead in Online Video Mean For the Future?

According to a February 2012 Experian Hitwise sample of 10 million US internet users, YouTube accounted for 75.9% of all visits to video-related websites.

YouTube's overwhelming dominance of the online motion picture space may not last. But the fact that YouTube is owned by Google - with huge financial resources and the world's largest cache of user information - may make it harder for competitors to grow their market share in online video.

Yes, Netflix and other streaming services are still adding subscribers: Netflix added 1.7 million customers in the first three months of 2012. But that growth may be slowing.

And yes, many of YouTube's competitors, like Netflix, are beginning to offer fresh longer-form content to attract new customers and justify their subscription fees (YouTube's revenue model is ad-based). For example new episodes of the TV series Arrested Development will begin appearing on Netflix in the Spring of 2013.

But the 2011 data from YouTube suggests that the lead YouTube has built up (in the 7 short years since YouTube launched) is daunting.

For example, according to YouTube, at the end of 2011 there were 800 million unique users visiting YouTube each month (with millions of these users subscribing to YouTube "channels" every day). And the YouTube audience continues to soak up the short-form videos that dominate the service at an amazing rate: Currently users watch over 4 billion hours of video each month.

What does the future hold?

No one knows.

But we do know that the average length of an online video is increasing. According to March 2012 comScore numbers the typical online video was 6 minutes and 24 seconds long. That's an increase of 12 seconds month-over-month, 54 seconds over the past six months, and 1 minute 12 seconds year-over-year. If this trend continues (online videos getting almost 20% longer each year), how long will it be before online videos are the length of traditional TV episodes?

And, as users increasingly watch longer videos online, YouTube has a huge advantage over all of its online competitors (not to mention Old World broadcasters). That's because YouTube is owned by Google - and Google knows more about the online audience than any other company in the world.

The way that YouTube videos spread on the social network - and the information that Google can collect about the audience as the videos spread - marks a clean break with the past. And, with the possible exception of Facebook, Google stands in an exceptional position to exploit the way that motion pictures will evolve on the social network.

In the Old (pre-YouTube) World, the distribution of motion pictures was built around tightly-controlled choke points where revenue could be collected. Starting in April of 2007, YouTube pioneered the social sharing of online video, where the spread of videos from peer to peer was encouraged. YouTube's model increases the number of views and therefore the potential reach of advertising messages - but it bypasses the theaters, TV networks and video stores where the Old World content owners were accustomed to collecting revenue.

That's why YouTube's business model was initially seen as a threat by Old World content owners. By 2008, there were dozens of lawsuits pending against YouTube. In 2012, those battles may be coming to an end. Even though some lawsuits continue to wind through the courts (e.g., in June 2012 a federal judge rebuffed Viacom's $1+ billion claim for copyright infringement against YouTube), it seems that YouTube has been able to negotiate deals with most former litigants - either giving them a share of YouTube's revenue or the right to take down content that is on YouTube without permission.

As the mechanisms for sharing YouTube's advertising revenue have been developed and matured, it seems that most of the big studios and record companies have realized the folly of fighting the appetite for online video that YouTube is satisfying.

Instead of suing YouTube (and the users who share content), the MPAA and RIAA members seem to be more focused on monetizing the massive potential for the spread of content via social networks.

How massive?

According to YouTube's 2011 data, roughly 100 million people take a social action on YouTube (likes, shares, comments, etc) every week. This means 100 million people are potentially serving as part of a New World marketing team - spreading the word about online motion content - each week. Instead of treating fans who share their enthusiasm for online content as "pirates," the big content owners are apparently beginning to realize the potential for earning revenue (e.g., more viewers who might see YouTube ads) as videos spread through social networks.

And all the information about that potential audience - information that Google (YouTube's parent) is gathering from YouTube and all of Google's other services (including info about each user based on their history of searches and their Google+ social graph) - offers an unprecedented opportunity to customize motion picture content and to exploit the web's potential for interactivity.

The current dominance of YouTube in online motion pictures raises (for me) some very interesting aesthetic and business questions:

Given all the data about the audience that Google is gathering, how will online motion pictures evolve?

Just as Google's search queries now return links that are personally relevant to a given user (based on the user’s social networks and location), how will YouTube start to employ user data?

Will Google soon find ways to fold your personal data into the motion picture stories you see?

If motion pictures online know all that Google knows about me, how long will it be before my experience of online movies and TV is customized?

And what will entertainment look like, when motion pictures can anticipate and respond to each unique user?

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