Print 6 comment(s) - last by Darkk.. on Aug 31 at 12:19 AM

Google is reportedly in talks with major Hollywood studios to deploy a pay-per-views streaming video service.  (Source: Paul Sakuma / Associated Press)
Can YouTube grow up?

Google subsidiary YouTube is the world's top video site and has made stars with six-figure yearly incomes.  However, for all that it's still not viewed as the first place to put more mature, higher-production value content such as television shows or movies.  Sites like Hulu and Netflix have dominated in that arena.

Now as Hulu ponders a paid subscription service (and an IPO), Apple ponders streaming, and Netflix expands its own streaming lineup, Google is considering pushing a pay-per-view streaming competitor of its own.

The logic seems straightforward.  Video of all types is gradually transitioning online.  And as the king of (almost) all things web, Google obviously needs to get a piece of that action.  

Fast Times, who reported news of Google's pay-per-view plans quotes a top executive close to the talks as saying, "Google and YouTube are a global phenomenon with a hell of a lot of eyeballs – more than any cable or satellite service.  They’ve talked about how many people they could steer to this . . . it’s a huge number."

Google is reportedly in talks with several major Hollywood studios (likely Fox/News Corp., ABC/Walt Disney, NBC, and CBS).  And the talks have reportedly intensified over the last few weeks as news of Apple's upcoming September press conference hit.  Apple is expected to launch new video services along with a new version of its Apple TV streaming media box at that event.

A rental service has already gone through beta-testing on Google's YouTube.  That service has been in operation since January.

A full-fledged service would require solid commitments from the video industry's top players.  However, those players reportedly are enticed by the fact that Google could use search engine results and YouTube results to steer users to their content.  That could add up to a big payday for them, at a time when physical media sales are shrinking.

Google acquired YouTube in 2006 for $1.65B USD.  While that may seem like a bargain, given that the property is one of the most visited sites on the internet, YouTube has struggled with profitability.  Its business model requires lots of bandwidth as video is a data-intensive type of web traffic.  And that bandwidth adds up to big serving costs for Google, which eat up the advertising revenue generated by the site.

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flat monthly fee > pay per view
By kattanna on 8/30/2010 12:29:29 PM , Rating: 2
im still amazed at how some companies think pay per view is the way to go.

for certain unique events like a special game or something, sure. but for everyday viewing, not at all.

hence why netflix keeps growing.

By frobizzle on 8/30/2010 2:44:21 PM , Rating: 2
I agree with you on that. I don't bother with cable because there is little or nothing on there worth the cost of the service. And I sure as hell am not going to fork over any lucre for the same crappy programming I already refuse to pay for on cable.

By Micronite on 8/30/2010 2:58:27 PM , Rating: 2
True. Even if the numbers don't seem to add up.

I know I get my money's worth from Netflix streaming. Having kids but no cable/sattelite gets me my money's worth within a week, I wager.

But even then, just like unlimited data plans on phones, people don't like limits. We like to feel the freedom of being able to do what we want when we want. Even to the point of spending more money for it when it may not be necessary.

Bandwidth Costs
By MozeeToby on 8/30/2010 12:34:09 PM , Rating: 2
It's worth noting that no one outside Google actually knows what Google pays in bandwidth costs. Obviously Google's many services eat up a lot of bandwidth, that isn't the question. The thought in many circles is that Google has bandwidth sharing agreements with the tier 1 ISPs, which is why Google owns so much fiber laid across the country and around the world. This would mean that Google's bandwidth costs are basically the maintenance costs for the fiber that it owns, which would be significantly lower than even the best rate they could get from a tier 1 ISP.

RE: Bandwidth Costs
By HrilL on 8/30/2010 1:39:18 PM , Rating: 2
I have to agree. Google is the worlds 3rd largest ISP according to this

So they likely don't pay much for traffic since they'd have massive peering agreements...

Bandwidth issues
By Darkk on 8/31/2010 12:19:46 AM , Rating: 2
Video streaming is the way to go. However, with bandwidth caps is going to be an issue.

Comcast caps it at 250GB per month which most users won't even get past it. Now with HD video streaming it'll happen sooner.

Comcast did say they may raise the cap in the future if warranted. I bet in order for that to happen Netflix, Google and others may subsidize the extra bandwidth usage.

I've heard that Netflix actually encourages people to use streaming as it cost them 3 cents per video vs 40 cents for DVD. It'll be matter of econominics to take this route.


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