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October 26, 2014

What Do YouTube's New Celebrity Channels Mean for Movies and TV?

by Michael Hogan, posted Oct 29th 2011 2:50PM
Psst! Hey, smart guy, did you get your million-dollar advance from YouTube?

If not, why not? According to an announcement made late yesterday, hipsters (Vice magazine, Pitchfork.com), actors (Ashton Kutcher, Amy Poehler), rappers (Pharrell, Jay-Z), and seemingly everyone in between (Madonna, Lionsgate, Shaquille O'Neal) have signed on to provide professional content for a series of new channels the Google subsidiary is expected to launch next year, in a deal valued at upwards of $100 million. Each partner will reportedly get an advance of up to $5 million; if and when that's recouped via advertising revenue, the partners will split any additional revenues roughly evenly.

So what, if anything, does this mean for the future of movies and TV?

Well, any time Google sets its sights on "revolutionizing" something, you can bet that big changes are coming -- whether or not the search giant itself succeeds in bringing them about. In this case, the target is cable TV, which every consumer in the land agrees is overpriced, under-serviced, infuriatingly attached to a one-size-fits-all model, and run by despicable people who in their free time do things like ruin the good names of once-venerable athletic organizations.

If you've got an Internet-connected TV or Blu-ray player, you've sensed the promise of the future: a rich à la carte menu of programming options that allows each of us to choose and pay for what we want to see, when we want to see it, without being forced to finance 478 channels we never watch. But you've probably also grasped the problem, too: who wants to trade in one cable account, however pricey, for an ever-expanding collection of subscriptions to Netflix, Boxee, Roku, Hulu, Vudu, Amazon, iTunes, and beyond, especially if you still have to pay the cable company for your broadband (not to mention buy a set of 21st-century rabbit ears just to watch the Super Bowl or the Oscars)?

What we are facing is not a technological hurdle but a licensing problem. You can't compete with cable if you can't cut the right deals; and by the way, the reason cable is so expensive is because those channels demand actual money in exchange for airing rights. In recent weeks, we've watched Netflix deflate dramatically as the expiration of its sweetheart deals with Starz and other outlets forced a somewhat desperate reassessment of its business model. In an interview with The New York Times Magazine, C.E.O. Reed Hastings was reduced to describing Netflix not as the future of entertainment but as an underdog competitor to HBO.

What does any of this have to do with YouTube's new channels strategy? In one sense, it's a logical extension of YouTube's dominant position among video services: chances are, you've already downloaded the YouTube app to your Internet TV (especially if you've got a Google TV, which received an upgrade simultaneous with yesterday's announcement), but skateboarding-chicken videos aren't necessarily what most people look for when they settle in on the couch for an evening of entertainment. Maybe the promise of a skateboarding channel programmed by Tony Hawk, however, will persuade you to click the YouTube icon instead of the Netflix one. Instead of negotiating with studios and networks, YouTube is taking a stab at replacing them. (You can see the complete list of announced channels here.)

Seen from that perspective, this project may best be understood as an incubator: chances are, 90 percent of these channels will go the way of UPN and The WB. But if YouTube can create even one or two viable long-term properties, this $100 million investment may prove well-spent indeed. No one knows quite what the future of Internet-enabled TV will look like, but at this very moment there are more ways than ever for new shows to find audiences without having to bother with the gate-keepers of broadcast and cable television. Any show that manages to build a loyal, digitally savvy audience from the ground up will have plenty of options for monetizing its success, from advertising, direct subscriptions, licensing deals, royalties, and merchandising spin-offs to -- why not? -- good old-fashioned fees from Time Warner or Cablevision.

Obviously, YouTube wants in to that game. And so, by the way, does everyone else. This site's parent company recently announced that its streaming channel, AOL HD, will soon be available on Samsung Smart TV and Google TV.

But enough shop talk. It's time to ask the most important question: Which one of YouTube's new channels would you subscribe to? Head on over to MovieFone to vote in their poll.

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