YouTube is bankrolling about 100 channels covering topics
ranging from food to sports in an effort to attract the
advertising dollars of the television world.
The cramped third-floor studio where a scarf-wearing
puppet is being filmed feels more like the hive of an
Internet startup than the set of a video production.
Squatting behind a table on one end of the room, the show's
director does double-duty as puppeteer, while colleagues
outside the camera's field of view toil on Mac computers.
Peter Furia, the director-cum-puppeteer, has no formal
background in acting. But with years of experience making
short online videos that "went viral" on the Web, Furia and
two partners have high hopes for American Hipster, a new
YouTube "channel" that streams three original series every
American Hipster is one of about 100 channels covering topics
ranging from food to sports that YouTube is bankrolling to
attract the advertising dollars of the television world by
getting YouTube users to adopt the habits of television
The success of the channels will test whether YouTube, a
division of Google, can evolve from a popular hub for home
videos into an influential player in the entertainment
industry's big leagues.
This week, YouTube will promote a new slate of original
channels to big-brand advertisers in New York, hosting for
the first time a splashy "upfront" event where marketers
preview upcoming television shows and allocate ad dollars.
It joins a growing crop of other Internet services, from Hulu
to AOL and Yahoo, also trying to lure TV dollars to their own
growing menus of online video programming.
The more professional and semi-professional content that
YouTube adds to its mix of videos, the greater the ad revenue
it will reap, said Pivotal Research Group analyst Brian
"If it's not professional content, it's hard to monetize,"
said Wieser. "An advertiser is unlikely to want to be
associated with the proverbial cat on a skateboard."
YouTube's head of global content, Robert Kyncl, said YouTube
is not trying to replace TV.
"No matter what you do, there is too much great stuff on TV,"
he said, citing personal favorites such as the AMC series
Mad Men and Breaking Bad.
The new channels will improve YouTube in the way that cable
transformed television, Kyncl said, allowing consumers to
regularly "get their fill" of their favorite topics and
giving marketers an easy way to pitch products to
well-defined segments of viewers.
Kyncl said it should take between six months to a year for
the new channels to take off.
YouTube's efforts are being closely watched by Google
investors, eager for the search company to tap new sources of
Google, which generated roughly $US38 billion in revenue in
2011, does not break out financial results for YouTube.
Analyst estimates for YouTube's revenue this year generally
range between $US2 billion and $US3 billion.
To jump-start the new channels, YouTube distributed roughly
$US100 million among 100 content producers last year.
The funding essentially serves as an advance on the
advertising revenue that the channels are expected to
generate. YouTube sells ads on the channels and shares a
portion of that revenue with the channel partners.
Thomson Reuters is among YouTube's partners.
According to YouTube, the most successful of the new channels
are garnering more than 1 million video views a week.
DanceOn, a YouTube channel that pop star Madonna is involved
with, plans to launch a total of 10 original series this
The channel's first show, a dance competition featuring
YouTube celebrities such as Obama Girl, has helped the
channel get 26 million monthly video views, said DanceOn
Chief Executive Amanda Taylor. She said she was also thinking
about how to do a scripted program with a storyline.
SourceFed, a news-oriented channel started by YouTube veteran
Phil DeFranco three months ago, releases five videos of two
to three minutes in length every day.
DeFranco, who dropped out of college several years ago to
focus on making YouTube videos, has expanded to a 10-person
crew, moved into a bigger studio and purchased new equipment,
including clip-on lapel microphones and additional cameras,
as part of his plan to create a "news network" on YouTube.
The SourceFed videos don't yet attract as big an audience as
the original YouTube video show he started several years ago.
But because DeFranco is now producing a greater number of
videos, his total monthly video views, now at 25 million,
have surpassed his previous efforts.
A YouTube program with 20 million views sounds impressive
when compared with successful cable television shows that
garner 3 million views when they air. But Pivotal Research
Group's Wieser cautioned that all those additional online
views don't deliver a similar boost in ad revenue.
A short, three or four-minute YouTube show may only have a
couple of slots for ads he noted, while a one-hour television
program may have as many as 24 slots for 30-second ads.
For YouTube, getting a new crop of hits is only the first
hurdle - and it's a work in progress
"There will be some failures," Kyncl said. As in the world of
Web startups, some channels will "pivot" and refocus their
programs until they find the right formula, he said.