YouTube may be a loss leader for Google, though with some 80 million viewers, that's still one hell of a loss leader.
On the strength of the thousands of short-form content uploaded by members, YouTube has grown exponentially since its 2006 acquisition by Google. But how much of a business is there in dumb cat videos? As always, the challenge for management has been how to make YouTube's $1.65 billion purchase price pay for itself.
Now Google is considering a different tack to answer at least part of that question. As my colleague Greg Sandoval reported earlier Thursday, YouTube will begin offering feature films produced by at least one of the biggest Hollywood movie studios, possibly as early as next month.
"For months, Google, YouTube's parent company, has been talking to the major film companies about launching an ad-supported, streaming movie service, two execs with knowledge of the negotiations told CNET News. "It's not imminent," said one of the executives. "But it's going to happen. I would say you can expect to see it, if all goes well, sometime within the next 30 to 90 days."
Among other things, this would put YouTube on a more competitive footing in long-form video versus Hulu, the joint video venture formed by NBC Universal and News Corp. The shift also underscores a recognition that the big spenders increasingly are getting picky. Despite the viral growth in user-generated content, advertisers would much rather spend their money on the professionally created stuff.
That's hardly an epiphany. What's surprising is that it took management so long to reach this conclusion. I'm not going to nitpick but what's more surprising is that even with an improved wide-screen video player, YouTube still lags Hulu in terms of picture quality. Maybe that doesn't matter for wonder-of-me moments shot with my home video recorder. It matters a lot when you're sitting down with prospective advertisers, freaked out by a disastrous economy, about where to put their money.
So it is that MG Siegler of VentureBeat correctly asks whether any of Google's exertions to date are enough to really matter.
Of course, there is still no real proof that Google has figured out an effective way to monetize these or any other videos on YouTube. So a large question would have to be if feature film content would be any different? Another question is if users will be willing to watch feature films in YouTube's often less-than-stellar video quality. It's one thing to watch short clips in low resolution, but sitting through an entire 90-minute to 2-hour feature may be a bit much to ask.
Technically, that doesn't sound like a very tall order. But the longer Google takes to figure out a fix, the more YouTube risks losing its status as a pop culture phenom.