YouTube going on the defensive as competition moves in: report

Google's (NASDAQ: GOOG) golden goose, YouTube, is increasingly on the defensive, both from SVOD players like Hulu and Netflix (NASDAQ: NFLX), and from social media OTT plays like those of Facebook and Twitter. And that protective mentality is costing the online video giant both creative talent and market share, a Variety story says.

Hulu, as well as independent online video providers Vessel (helmed by former Hulu CEO Jason Kilar) and Vimeo are increasingly signing top-rated YouTube stars "promising creators bigger bucks for their work in exchange for exclusive rights," the article said.

And competition continues to rise, not just from more formal (dare we say traditional) short- and long-form online video providers but from user-heavy social media sites. Facebook saw a meteoric rise in online video views last year after upgrading its video service--growing from 1 billion views per day to more than 3 billion in the second half of 2014. Services like Vine and Snapchat offer users super-short video entertainment for an increasingly mobile-focused generation. And Twitter recently jumped into the video pool, enabling users to upload 30-second videos.

That YouTube is facing some stiff competition--thanks in part to the online innovation it helped to spur in the first place--isn't a surprise. What has investors concerned is that YouTube seems to be circling the wagons rather than innovating its way forward, the Variety article implies.

That may not be entirely true. Multichannel network players are increasingly floating rumors that YouTube will launch a subscription-based service soon--something that was bandied about late last year by news outlets. Since it already has a subscription service to model from, YouTube Music Key, it's not entirely unlikely that YouTube could add an SVOD element to its service.

Even if the SVOD rumor never pans out, YouTube's audience reach and its ability to generate revenues for both content providers and advertisers alike could keep it at the top of the game for years.

But even that is no guarantee: YouTube's revenues are reportedly stagnant, according to The Wall Street Journal, which said recently that the division pulled in $4 billion last year, but managed to just break even after the costs of infrastructure and content were factored in. If competing ad-supported services like Vessel begin to gain traction, YouTube may need to get more creative in its efforts to keep users--and revenues--flowing in.

For more:
- Variety has this story
- TNW has this story

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