Google's (Nasdaq: GOOG) YouTube long has been rumored to want to mold itself into more of an Internet-based cable company. Those rumors picked up a lot of weight today with a Wall Street Journal report quoting "sources" that said the video site is ponying up $100 million to roll out a slew of free channels with professional-quality video.
Backers are reported to include pro-skateboarder Tony Hawk, Warner Bros., ShineReveille (Ugly Betty), FremantleMedia (The X Factor), SyFy content source BermanBraun, and Mob Wives producer Electus.
Other content partners might include Everyday Health, former Sundance Channel chief Larry Aidem and former VH1 executive Michael Hirschorn's Iconic Entertainment, CSI creator Anthony Zuiker, women's-content creator DECA and The Wall Street Journal, which recently increased its financial news programming slate.
YouTube, which comScore said had more than 600 million visitors last month, believes that its bargain ad rates--they're lower than sites like Hulu, for example--and targeted advertising format are ideal for such a venture. The property, which Google bought for $1.6 billion in 2006, is expected to see net revenue of $1 billion this year, double its net revenue a year ago. It also is offering advertisers opportunities to sponsor programming directly, and may alow content partners to sell ads as well.
David Cohen, an executive vice president at Universal McCann, a media-buying agency, told The Journal that the site's new strategy "is a clear signal of its commitment to creating immersive and engaging original content." And, despite the disparity in ad rates between Hulu and YouTube, "there is nothing preventing YouTube from getting Hulu-type ad rates assuming the final content is as engaging as we anticipate."
- see this WSJ article
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