By Kishore Jethanandani
Youtube’s harum-scarum expansion of goofy user-generated content is giving way to first steps towards professional content on premium TV channels. Sports content is the linchpin for commercial TV and will likely light the blaze of the trail to its long anticipated disruption by online social TV.
Youtube’s spending on premium channels has more than doubled in 2013 over 2012. The “grants” received by producers of content for premium channels increased from $100 million dollars in 2012 to $250 dollars in 2013 according to the numbers cited by a Needham Insights report. Content producers set aside all their revenues up to the amount of the grant to payback YouTube.
YouTube has not yet purchased broadcasting rights from mainstream sports clubs but it is able to gain the rights for broadcasting niche sports or a geography outside the main centers of the game. Skydiving is largely unknown outside small groups of hobbyists but found an audience of 8 million on Youtube when Felix Baumgartner did a sound barrier breaking jump. Professional Bull Riders Association (PBR), a game known to few people, saw an advantage in an all-digital strategy, in collaboration with YouTube, in order to expand its reach. Major League Baseball streams games on Youtube outside of the USA, NBA streams its minor league sports and the London Olympics expanded its reach to Asia.
The future of broadcasting rights for major league games is caught in a limbo as conflicting forces drive them in opposite directions. Cable companies need exclusive broadcasting rights to retain their customers and they are bidding at a higher rate to keep them. On the other hand, the hold of cable companies on broadcasting rights is tenuous as the audience shifts online to access content on mobile devices or any device. The number of households without any television jumped to 5 million in 2012 compared to 2 million in 2007.
Meanwhile, Youtube is able to cater to the demand by sports clubs to keep fans engaged with highlights of the game, interviews with sports men and women and peeks into the backrooms. One such Youtube channel is Love Football that has snippets of the game with captivating content like the footage on the goals scored, moments of suspense and moments of skillful maneuvering and reviews of the news.
Some of the more successful and competitive sports broadcasters supplement their live programming with partnerships with Youtube. ESPN, the leading sports broadcaster, has 1.2 million subscribers to its Youtube channel. Fox Sports, the upcoming challenger, has over 69,000 subscribers and sees their growth as a priority. They are looking to gain an edge with the interaction of fans with the content.
The demand for streaming media will only grow as 30 percent of cable subscribers have expressed their willingness to switch to streaming media. Youtube will be able to tip the balance of forces in the broadcasting industry in its favor when a high speed broadband network like the one Google is making available in Kansas is more widely available across the USA for superior quality programming.
Youtube’s premium channels will bring some of the benefits of commercial TV, such as ease of discovery, while keeping the fun of personalization of the Internet world. Not all of the freewheeling ways of the Internet world will be lost as fans will still be able to contribute their content in conversations, within the communities created by sports clubs, with the added benefit of convenient cataloging. A tough battle over broadcasting rights looms as the numbers of fans participating on Internet channels rises rapidly.
A version of this post was published in Digital Canvas Retail hosted by UBM Techweb