Google Inc. (Nasdaq: GOOG) is expanding the channel experiment it began almost a year ago in an effort to compete with cable companies and broadcasting networks to produce professional video content and attract higher advertising revenue on YouTube, one of the search giant's many subsidiaries.
YouTube, the popular video-sharing website first acquired by Google six years ago this coming Tuesday, announced on Sunday that it has finalized deals in several European countries including Germany, France, and United Kingdom to pay cash advances for more than 60 new “channels” offering original, TV-style programming on the site.
The expansion of YouTube’s “channels” program adds to the approximately 100 channels that were created in 2011 when the Google first introduced the program, investing a hefty $300 million over the next six months to promote the new content.
From the beginning, YouTube's channel experiment’s core strategy was just that -- throw enough money at celebrities to make videos for the site, and hope that the new content will establish the massive video network as more than just a haven for cat videos and amateur viral-content. And with the backing of a company like Google, YouTube had the financial capital to attract the highest grade of celebrities to augment the brand. Along with Sunday’s announcement, for instance, rapper and entertainment mogul Jay-Z launched a new channel called “Jay Z’s Life+Times” to complement his week of concerts held at the new Barclays Center. The channel already has almost 150,000 subscribers, and over 300 million views.
YouTube did not go into detail about what would be offered in the new funded channels. But partners include traditional television channels such as the BBC and Euronews, as well as Endemol N.V., the Amsterdam-based television production company that makes popular reality shows like “Big Brother” and “Fear Factor.”
Speaking in an interview with AllThingsD, Robert Kyncl, vice president and global head of content at YouTube said that the new funded programming is part of a larger plan to move the UK, Germany, and France into “gear three,” the ultimate goal being “gear four” -- offering expanded partnerships with preexisting channels to keep them involved in unique content creation “for multiple years” without facing the typical concerns of “focusing on fundraising.”
Along with major online video search and sharing rivals such as Yahoo Inc. (Nasdaq: YHOO), Google is hoping to lure advertising revenue away from the TV. But both major internet companies will face steep competition from traditional broadcast networks and cable providers as well as other tech industry luminaries hoping to shake up the marketplace for video content. Microsoft Corp. (Nasdaq: MSFT), recently announced its own television-style programming to premier on its home entertainment and video game console, the Xbox 360, a challenge cable companies are trying to meet with their own cloud-based multimedia content.
The online video-sharing and ad-revenue supported model is also already a fixture of the U.S. media landscape, but YouTube admitted itself that market remains relatively underdeveloped in Europe.
Google shares fell Sunday and Monday following the announcement, opening on Monday below Sunday’s closing price of $767.65 and falling as low as $756.93 in late-morning trading.
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