With the announcement of its new service, Google is throwing its hat into a crowded market of video providers all trying to answer consumers’ demands to give them want to see, when they want to see it. Americans are increasingly watching video through their laptops, smartphones and tablets — particularly the approximately 5 million “zero TV” households without cable television that the Nielsen research firm identified in March.
But with all these choices and their various price models, it’s difficult for consumers to figure out which services will offer the best bang for their buck, said Dan Rayburn, a streaming-video analyst for Frost & Sullivan.
YouTube’s new service asks users to pay as little as 99 cents a month for individual channels. Netflix charges a higher subscription rate butboasts partnerships with studios including Disney, which Thursday granted the streaming service exclusive rights to five popular children’s shows.
Meanwhile, Apple’s iTunes charges for television shows per episode and season. And on Thursday, Sen. John McCain (R-Ariz.) introduced a bill that puts pressure on cable companies to offer their consumers the ability to pay only for the channels they want to watch.
That may sound like a good idea, but some analysts said that it’s also setting consumers up for a big headache as more companies jump into the mix. “As a consumer, it’s completely fragmented,” Rayburn said. “You don’t know what is available, at what quality or with what business model.”
In YouTube’s case, Rayburn said that he doesn’t think Google’s long-awaited push into this market will offer serious competition to bigger streaming players such as Netflix because it doesn’t offer enough variety.
But the company could make a lot of money if even a fraction of its 1 billion monthly users sign up for a subscription, he said.
In the long run, analysts said, the addition of paid subscriptions could also make it more attractive to advertisers, particularly if draws professional videographers to the site, said Gerald Kane, associate business professor at Boston College.
“Advertisers are a little concerned about what their brand will be alongside” YouTube’s eclectic and often amateur mix of videos, Kane said. “They’re asking if it’s a good idea to have your brand next to a video about Mentos and Coke or a little kid recovering from a dentist trip.”
The new service has certainly attracted impressive partners, including the producers of Sesame Street, the Ultimate Fighting Championship league, and National Geographic Kids, all of which will offer full episodes on the video site.Other partners, such as the e-learning company Big Think, will offer paid users access to additional content such as question and answer sessions with experts or access to exclusive discussion forums, according to chief executive office Victoria Brown.
Paid channels begin rolling out immediately and will be available more broadly to a number of YouTube content creators over the “coming weeks,” according to a company blog post. Users will be able to access YouTube paid channels on their computers, phones, tablets and televisions.