Prediction of the day: YouTube pay-to-watch trial will fail
Yesterday YouTube announced the launch of a trial whereby a small number of channels will start charging subscriptions. Somewhat hilariously for a platform that has officially no-one under 18 watching, many of the channels are for kids, including Sesame Street and National Geographic Kids. Somewhat contradictorily after Eric Schmidt's big speech about YouTubers, most of it is content previously seen on TV.
It isn't the first time that YouTube tries to charge for content. A couple of years ago, it launched a pay-per-view movie trial. A few months later, the trial closed quietly.
Here is my prediction: this experiment will fail, too.
And here are three reasons why:
The content is not "must-see" enough: Sesame Street may be a great show but it's available both on TV and on other VOD platforms. It's also easily replaceable by anything from Dora to Peppa Pig, as anyone with kids will tell you. Same with the rest of the line-up - while YouTube has obviously tried to line up content that appeals to engaged fans (and kids), none of the content is so unique that it would justify a premium.
There are too many alternatives: let's talk about content for kids on the iPad (which is one of the key segments YouTube seems to be going for). If you are actually willing to pay, there is Netflix for Kids which gives you much more for your buck. Prefer your content free? Try one of the catch up services, some of the programme websites (including Sesame Street), or just look for free alternatives on YouTube itself.
But the main reason this will fail is that Google hasn't found a good system yet to get money out of its consumers. Adsense money - they've got that market sawn up. But if Google Play can't monetise Angry Birds because of the reluctance of people to give out their credit card details to Google, what are the chances of this semi-second rate content offer making a difference?
The truth is, despite what Eric Schmidt will tell you, YouTube is a platform that people use to watch short form content casually. It is replacing free-to-air daytime television, in that sense, and therefore its audience has a fairly high acceptance of ads (except those pesky pre-rolls). There is no focus on creating engagement and loyalty through content, in the way that Netflix is attempting (and succeeding).
Instead of going for the pay-per-view content market, YouTube would be far better off improving their sales process to learn to sell value, not volume, around content, something, ironically, that TV sales house are much better at. Advertising sales is their key strength. They should work on getting even better at it. There is still an enormous amount of money to be made there for them.
