James R | On 22, Jul 2015

YouTube is beginning to build its subscription VOD service – but the company is still missing crucial bricks.

The video site’s entry into the subscription streaming race has been long mooted, as Google attempts to establish its service as a leading force in a sea of expanding rivals. YouTube has already unveiled its own kids’ app and a dedicated gaming site to take on the growing family VOD sector and Amazon’s recently acquired streaming giant, Twitch. But Netflix and other subscription sites remain the buzz words of the VOD world.

Google is also hunting ways to boost its current ad-driven revenue, as part of its own financial growth, as well as its ability to retain the YouTube vlogging stars that have become its own brand of celebrity – indeed, Facebook, Twitter and other video platforms are keen to woo talent away where possible. Vessel, meanwhile, launched earlier this year with its own SVOD proposal for YouTube stars, planning to release videos up to 48 hours before their YouTube premiere exclusively to its own subscribers, thereby earning creators more money.

So far, the promise of a native paid service is working: partners accounting for more than 90 per cent of YouTube viewing have signed up to Google’s initiative, reports Bloomberg, with “more in the pipeline” ready to close. But YouTube’s pay-wall is missing a significant part: big name TV networks.

Unnamed sources tell Bloomberg that NBC, Fox and CBS are not on board with the project, but popular TV series are a staple of streaming services such as Amazon Prime and Netflix. Indeed, the SVOD giants regularly battle for the latest shows, with different deals often arranged for different territories. (In America, for example, Netflix offers The Walking Dead, while in the UK, Amazon holds the exclusive rights.) The fight for third party content indicates just how important it is to attract new subscribers. Between NOW, Netflix and Amazon Prime, though, the subscription sector is already bursting at the seams in the UK: the majority of shows have been snapped up, which means that not only would YouTube struggle to build a customer base, but also to acquire content.

YouTube’s reliance upon original videos is both its biggest weapon and its biggest weakness: why would people choose to subscribe to a service when the videos are available for free, albeit with commercials? Partners have reportedly been told that they clips will not remain on the public, ad-supported YouTube unless they sign up for the subscription service. YouTube, meanwhile, remains a popular place for TV giants, such as NBC, to promote programmes with clips and trailers, rather than release whole episodes.

YouTube must therefore create something exclusive to offer customers. Google is already stepping up its funding for original productions, with deals with Fine Brothers Entertainment and Joey Graceffa for new series. Budgets are thought to range from a few hundred thousand dollars to millions, with the content only available exclusively to subscribers. At the same time, new features will be introduced, including the ability to download videos to watch offline and to watch videos on mobile devices while using other apps. Music Key, YouTube’s paid music video service, may also be folded into the new product.

“We are progressing according to plan,” the site has said in a statement. Will it be enough?

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