Alphabet's (NASDAQ: GOOG) YouTube is getting into the content rights market, reportedly meeting with Hollywood studios and other content owners to discuss licensing movies and TV series and to hear pitches for original content.
Citing unnamed "people familiar with the matter," The Wall Street Journal said that two media and entertainment veterans brought aboard by YouTube are involved in the talks. Kelly Merryman, a former Netflix executive, and Susanne Daniels, who once headed programming at MTV, are part of the process, which WSJ said appears to be in the early stages.
This isn't the first time rumors have surfaced about YouTube exploring the possibility of directly licensing content. However, with the launch of its new subscription option, YouTube Red, the dominant user-generated video provider clearly needs to provide as many value-added features as possible to justify the $9.99 subscription price. Currently, paid subscribers' biggest advantages are ad-free videos and the ability to save videos to their mobile devices.
How YouTube would market licensed content is up for speculation as well. The service could place movies and series into dedicated channels, within the current structure of the website, or it could set up a separate, subscriber-only section of the site with a user interface similar to those of dedicated streaming services like Netflix (NASDAQ: NFLX), Hulu and Amazon Prime Instant Video (NASDAQ: AMZN).
YouTube would be arriving late to the content licensing party. Not only are the three main SVOD providers well ahead on locking in exclusive content deals -- Hulu has really pushed this initiative in 2015, forcing Amazon and Netflix to dedicate more of their budgets to grab their own exclusive series -- but content owners have wised up to the profit potential of their existing content. Distributors and pay-TV operators are also exploring their own streaming initiatives and are revamping their rights and retransmission agreements accordingly. All those elements spell added expense for YouTube.
One possible bright spot, however, is the existing content licensing relationships that Alphabet has built through its Google Play transactional online video service. Sources told WSJ that YouTube is leveraging those connections as part of the negotiations with studios.
In the meantime, YouTube's concrete moves in the past year have addressed competition from Facebook and Twitch. The service debuted YouTube Gaming, its live-streaming counterpart to Twitch, and is becoming a go-to point for user-uploaded virtual-reality video. It also rolled out support for Cardboard, a low-cost VR viewing device developed via Google.
- see this WSJ article (sub. req.)
Editor's Corner: The top 13 SVOD launches in 2015 – and more on the way
YouTube adds virtual reality uploads, Cardboard support to its video portfolio
YouTube Red subscription service goes live
YouTube Gaming adds mobile capture, sponsorship features to live-streaming service