YouTube’s business model is currently based entirely on advertising revenue. But what if the site started offering streaming movie rentals for a small fee in a move meant to rival iTunes, Amazon, and Netflix. How many of the 100 million-plus U.S. users would bite?
YouTube Revenue
I don’t think anyone can legitimately claim that YouTube isn’t a successful site, although Time magazine gave it a damn good go. With millions of users around the world and a brand name that would be the first mentioned by the vast majority when asked about online video, YouTube is as big a hit as some of its viral videos.
However, its current business model doesn’t seem to be bearing as much fruit as Google clearly thought it could when it paid $1.65 billion for the site. With the revenue from advertising almost wholly being consumed by bandwidth and associated costs, YouTube isn’t bringing in the big money as of yet.
Evolving YouTube
YouTube has made efforts to evolve in recent months, especially in trying to bring more long-form content to the site. Although it is still actively seeking short user-generated clips, it’s also been busy persuading movie studios and media companies to place content on the site, with only a modicum of success.
Now, according to The New York Times, YouTube could be about to make to biggest leap of all – starting to sell content as well as offering it for free and paying for it from advertising. Sony Pictures, Warner Bros., and Lionsgate are all thought to be in early talks to bring movie content to the site.
Streaming Movie Rentals
Talks are only at an early stage but if fruitful then movies from the three movie studios could soon be available to rent from YouTube. Older titles may be available for free and ad-supported while new films will be offered for around the $3.99 mark that Apple iTunes has made the standard.
Any such deal would make sense for both parties. YouTube would gain a valuable revenue stream and a chance to change its business model for good. While the movie studios are already looking to make content available online through a number of different legal outlets to stop the slide in DVD sales and halt the rise of illegal downloading.
Conclusions
At this point there is no guarantee this will actually happen but it seems likely. Consumers have shown a willingness to purchase streaming content online, as Apple and Amazon attest. And YouTube would be mad not to try and utilize its huge user base to generate more revenue.
So, everyone is a winner, apart from Epix, which is trying to set itself up as a kind of Hulu for movies. YouTube could beat it to the punch.
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