YouTube Makes Paid-Content Play

IBB Consulting Survey Finds Potential for New Model
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YouTube applied a bit more pressure on the traditional pay TV market last week with the launch of an a la carte subscription video package that’s starting off with a slate of 53 channels.

Among the initial batch, NuestroPix represents the low end, costing just 99 cents per month. SmartTV, at $9.99 per month, is the priciest. If consumers paid the monthly rate for all of 53 channels , it would set them back $190.47, or about $3.59 per channel, per month.

Among the early movers, Sesame Street will offer full episodes when its paid channel launches, while the Ultimate Fighting Championship’s offering features recent replays and older, “classic” fights. Among other services that will present YouTube subscription offerings: gay and lesbian network Here TV; the suite of eights channels — Cars.TV, Comedy.TV, ES.TV, MyDestination.TV, Pets.TV, Recipe.TV, JusticeCentral.TV, and Smart-TV.com — from Byron Allen’s Entertainment Studios; and Grace Creek Media’s Sportskool Plus, a training/instructional service.

But will consumers pay to play? A study from IBB Consulting, a Philadelphia-based company that counts cable operators and media companies among its clients, indicates that YouTube’s new model has some market potential.

IBB’s survey of 250 Web users last month showed that consumers ages 18 to 24 subscribe to the greatest number of free YouTube channels, but an older segment — those ages 25 to 34 — are the most likely to pay for YouTube content. The most popular genres were sports, comedy, drama, news and “unscripted” shows.

According to IBB, about 18% of online consumers already subscribe to at least one free YouTube channel, while 9% take between one and five channels and 9% subscribe to more than five channels.

YouTube’s pay partners believe the over-the-top, subscription-based model offers them new, open terrain on which to establish themselves.

“You’re now in a world where there are no gatekeepers, in essence,” said Robert Johnson, chairman of RLJ Entertainment, which is offering Acorn TV and its new OnCue brand via YouTube’s new pay platform. “I think what we’ve built here … is the right formula. It’s one of having a media focus of creating proprietary brands and then having the infrastructure and the knowledge to take that content and redistribute it to other windows, thereby monetizing everything you produce.”

He said the target viewers for RLJ’s new urban-themed OnCue channel are the 2 million African-American households that pay $500 million annually to subscribe to premium channels such as HBO, Showtime and Starz.

RLJ’s Acorn TV, billed as the best of British TV, already has 25,000 paid subscribers via other platforms, such as Roku boxes. The expectation is to have 60,000 paid subs by the end of 2013, Miguel Penella, RLJ Entertainment’s CEO, said.

TAKEAWAY

An IBB Consulting study says YouTube’s new subscription model may appeal to 18-to-34- year-old viewers.

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