YouTube plans to challenge cable and Netflix with paid for channels

YouTube is planning the next phase of its development and is reported to be launching pay-per-view channels, which would see it challenge cable TV as well as streaming services such as Netflix and LoveFilm. According to various reports, Google’s YouTube has been in contact with a number of content producers with a view to supplying it with programming, which could be priced in the region of $1 to $5 (63p to £3.17) a month.

The paid-for channels could be launched as soon as the second quarter of this year and would open up a new revenue stream for YouTube, which last week reported record annual revenues of $50bn (£32bn), in addition to advertising.

The launch of the paid-for channels is not unexpected. A year ago, at an AllThingsD conference, YouTube chief executive Salar Kamangar spoke about the potential to encourage smaller cable stations, which are struggling in a crowded market, to move online where overheads are lower.

Kamangar said at the time: “If we have a subscription model, then absolutely that’s something that becomes possible.”

This was echoed by a YouTube spokesman who said it had long maintained that different content required different types of payment models.

The spokesman said: “The important thing is that, regardless of the model, our creators succeed on the platform. There are a lot of our content creators that think they would benefit from subscriptions, so we’re looking at that.”

YouTube already works with a host of media firms, including Endemol, NBC and BBC Worldwide, which share ad revenue with the Google-owned video site.

There are other signs that it is developing a focus on quality content as well. Last month, a documentary about the war on drugs produced by Sir Richard Branson’s son premiered free on YouTube for a limited month-long “online window”, in a trial breaking the norms of film marketing.

News of the paid services on YouTube follows its investment in music video site Vevo. YouTube was reported earlier this month to have taken a £42m stake in Vevo, which would give it a 10% share in the site. Vevo is also expected to renew an agreement to continue to host millions of music videos on YouTube, as part of the deal.

The launch of subscription-based services on YouTube will put it up again not only traditional cable firms, but also streaming sites such as Netflix and Hulu, which is jointly owned by Walt Disney, News Corporation and Comcast.

The move comes as Netflix launches its first original programming venture with a remake of the 1990 British political thriller ‘House of Cards’.

It is directed by David Fincher and stars Kevin Spacey, and represents Netflix challenging high-quality cable firms such as HBO, which is behind ‘Games of Thones’ and ‘Girls’, and AMC, which makes ‘Mad Men’.

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